Amarasinghe, D., and S. B. Jayatilleke, 2005, “Input-Output Tables for Sri Lanka, 2000,” Macroeconomic Policy Series No. 16 (Colombo, Sri Lanka: Institute of Policy Studies).
Munasinghe Institute of Development, 2004, “Impact of Power Sector Policy and Regulation in Sri Lanka with Emphasis on Poor Consumers” (Colombo, Sri Lanka).
Narayan, A., T. Vishwanath, and N. Yoshida, 2006, “Sri Lanka: Welfare Reform,” in Poverty and Social Impact Analysis of Reforms, eds. by A. Coudouel, A. Dani, and S. Paternostro (Washington: World Bank).
———, and Nobuo Yoshida, 2005, “Proxy Means Test for Targeting Welfare Benefits in Sri Lanka,” SASPR Working Paper 33258 (Washington: World Bank, Poverty Reduction Group and Social Development Department)
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Prepared by David Coady and David Newhouse, Poverty and Social Impact Analysis (PSIA) Group, Fiscal Affairs Department. The authors are extremely grateful to the following persons for useful discussions and providing ready access to background documents and data: Matt Davies, Olin Liu, Erik Lueth, Shehan Ramanayake, and Marta Ruiz-Arranz (all IMF), Amber Narayan, Tara Vishwanath and Nobuo Yoshida (all World Bank). The authors also benefited from discussions with the authorities and other development stakeholders, including the Institute for Policy Studies and the Munasinghe Institute for Development, during a presentation of the findings at a workshop in Sri Lanka in July 2006.
The headcount poverty rate based on the official national poverty line was estimated as nearly 23 percent in 2002 (World Bank, 2005).
The reform in pricing policy was introduced as part of a package of reforms that also allowed private sector participation in the import and distribution of petroleum products, which was previously the exclusive domain of the Ceylon Petroleum Corporation (CPC). In 2003, a subsidiary of the Indian Oil Company (Lanka IOC) was allowed to import and distribute fuel products and now controls approximately one third of all retail outlets.
Latest developments in world oil markets since the analysis was undertaken might have changed the magnitude of these figures slightly.
The estimation of the indirect price effect on other goods and services assumes that all cost increases are pushed forward onto output prices. Since much of the cost increases come through trade and distribution margins, which are nontraded, this is probably a good approximation. However, in the context of agriculture, we also consider the implications of not being able to fully push higher fuel costs onto output prices.
Throughout this chapter, absolute rupee values are at 2005 prices, calculated by inflating 1999 values by a factor of 1.68 reflecting inflation over the period.
These rates reflect the tariff in place at the time of the survey data. Note that these tariff levels are substantially below the existing cost recovery tariff for residential consumers, which has been estimated at Rs. 12/kWh (Munasinghe Institute for Development, 2004). The cost recovery tariff is expected to decrease over time with planned investments in more efficient plants.
The results are based on a restructured and simplified schedule with three blocks, with lower rates for the lowest block and higher for the higher blocks. Other more complex structures were tried but without any improvement on the reported structure.