Front Matter Page

© 2004 International Monetary Fund

March 2004

IMF Country Report No. 04/69

Sri Lanka: Selected Issues and Statistical Appendix

This Selected Issues paper for Sri Lanka was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on February 19, 2004. The views expressed in this document are those of the staff team and do not necessarily reflect the views of the government of Sri Lanka or the Executive Board of the IMF.

The policy of publication of staff reports and other documents by the IMF allows for the deletion of market-sensitive information.

To assist the IMF in evaluating the publication policy, reader comments are invited and may be sent by e-mail to publicationpolicy@imf.org.

International Monetary Fund

Washington, D.C.

Front Matter Page

INTERNATIONAL MONETARY FUND

SRI LANKA

Selected Issues and Statistical Appendix

Prepared by a staff team consisting of Enric Fernandez, Andrea Richter (both APD), Natalia Koliadina (PDR), Ravi Balakrishnan (WHD), and Ana Corbacho (FAD)

Approved by the Asia and Pacific Department

February 19, 2004

Contents

• I. The Transmission Mechanism of Monetary Policy in Sri Lanka

• • A. Introduction

  • B. Framework for Monetary Policy

  • C. Transmission Mechanism

  • D. Conclusions

• II. Worker’s Remittances and Tourism in the Sri Lankan Economy

• • A. Introduction

  • B. Worker’s Remittances

  • C. Tourism

• III. Sri Lanka’s Tax Incentives Regime

• • A. Pros and Cons of Common Tax Incentives

  • B. Main Features of Sri Lanka’s Tax Incentives Regime

  • C. Tax Incentives and FDI in a Regional Context

  • D. Tax Incentives and Corporate Income Tax Performance

  • E. Concluding Remarks

• Figures

• I.1. Accumulated Response to an Increase in the Repo Rate

• I.2. Accumulated Responses of Inflation

• I.3. Accumulated Responses to an Increase in the Repo Rate

• I.4. Accumulated Responses to an Increase in the Repo Rate

• Statistical Appendix Tables

• 1. Gross Domestic Product and Expenditure Components, 1998–2002

• 2. Saving, Investment, and Current Account, 1998–2002

• 3. Gross Domestic Product by Industrial Origin at Current Prices, 1998–2002

• 4. Gross Domestic Product by Industrial Origin at Constant Prices, 1998–2002

• 5. Trends in Principal Agricultural Crops, 1998–2002

• 6. Consumption and Prices of Petroleum and Electricity, 1998–2002

• 7. Price Indicators, 1998–2003

• 8. Selected Wage and Employment Developments, 1998–2002

• 9. Labor Force, Employment, and Unemployment, 1998–2002

• 10. Employment by Economic Sectors, 1998–2002

• 11. Summary of Central Government Operations, 1998–2003

• 12. Summary of Central Government Revenue by Component, 1998–2003

• 13. Economic Classification of Expenditure, 1998–2003

• 14. Functional Classification of Expenditure, 1998–2003

• 15. Current and Capital Transfers to Public Corporation and Public Institutions, 1998–2003

• 16. Transfer and Subsidy Payments to Households, 1998–2003

• 17. Deficit Financing (Economic Classification), 1998–2003

• 18. Outstanding Central Government Debt, 1998–2002

• 19. Monetary Survey, 1998–2003

• 20. Balance Sheet of the Monetary Authorities, 1998–2003

• 21. Balance Sheet of Commercial Banks, 1998–2003

• 22. Advances by Purpose and According to Maturity, 1998–2002

• 23. Selected Interest Rates, 1998–2003

• 24. Reserve Position of Commercial Banks, 1998–2003

• 25. Balance of Payments, 1998–2002

• 26. Exports by Commodity, 1998–2002

• 27. Imports by Commodity, 1998–2002

• 28. Direction of Trade, 1998–2002

• 29. Indicators of Trade Performance, 1998–2002

• 30. Services and Income, 1998–2002

• 31. Financial Account, 1998–2002

• 32. External Debt-Service Payments, 1998–2002

• 33. External Debt Outstanding, 1998–2002

• 34. Net International Reserves, 1998–2002