Fiscal Management Report 2016

FISCAL MANAGEMENT REPORT 2016
20th NOVEMBER 2015

MINISTRY OF FINANCE
SRI LANKA
FISCAL MANAGEMENT REPORT 2016
Ravi Karunanayake, M. P.
Minister of Finance
th
20 NOVEMBER 2015
Issued under the Fiscal Management (Responsibility) Act, No. 3 of 2003, consisting of the
Fiscal Strategy Statement 2016 (in compliance with Sections 4, 5 and 6) and the Budget,
Economic and Fiscal Position Report 2016 (in compliance with Sections 7, 8 and 9) by
the Hon. Minister of Finance.
ISBN 978-955-0814-04-6
Printed at Government Press, No. 118, Base Line Road, Colombo 08, and published by the
Ministry of Finance, The Secretariat, Colombo 01, Sri Lanka.
Fiscal Management Report 2016
ii
CONTENTS
Key Economic Indicators
Reporting Requirements Under the Fiscal Management (Responsibility) Act, No. 3 of 2003
Compliance - 2015
Page
vi
vii
viii
vii
PART 1
1.
Fiscal Strategy Statement - 2016

1.1 Overview
1.2 Medium Term Fiscal Strategy
1.3 Reforms
1.4 The Global Economic Condition and its Impact on Sri Lanka
1.5 Medium Term Strategic Priorities of the Fiscal Policy
1.6 Key Fiscal Measures For The Improvement of Overall Fiscal Policy Implementation
PART II
Budget Economic and Fiscal Position Report - 2016
1. Fiscal Developments
1.1 Overview
1.2 Government Revenue
1.3 Government Expenditure
2. Treasury Operations
2.1 Performance of the Government Treasury Cash Flow
2.2 Management of Government Debt
2.3 Disclosure of Contingent Liabilities on Treasure Guarantees
3. Foreign Financing
3.1 Foreign Financing Commitments
3.2 Foreign Financing Disbursement
3.3 Committed Undisbursed balance and Utilization
3.4 Outstanding External Debt and Debt Service Payments
4. Performance of State Owned Business Enterprises
4.1 Overview
4.2 Performance of SOBEs
5. The Economy
5.1 Economic Growth
5.2 Agriculture
5.3 Industry
5.4 Services
5.5 Unemployment
5.6 Monetary Sector Developments
5.7 Inflation
5.8 Stock Market
5.9 External Sector Developments
6. Global Economic Trends
6.1 World Economic Growth
6.2 Inflation
6.3 Fiscal Deficits
6.4 Government Debt
6.5 Unemployment
6.6 Interest Rates
6.7 World Trade
6.8 Commodity Prices
6.9 Capital Flows
Basis Used for the Preparation of 2016 Budget Estimates
1
1
2
4
9
9
10
12
13
14
21
32
36
36
36
37
38
38
39
42
41
43
45
45
51
51
52
58
60
65
65
67
68
69
74
74
74
76
76
76
76
77
77
78
79
iii
TABLES
Page
Table 1
Medium Term Macro Fiscal Framework: 2015-2018
Table 2
Summary of Key Indicators of World Economy
Table 3
Summary of the Budget
14
Table 4
Estimated and Actual Revenue and Expenditure : 2015
20
Table 5
Summary of Performance of Government Revenue
22
Table 6
Performance of Income Tax
23
Table 7
Performance VAT
24
Table 8
Performance of Excise Duty
24
Table 9
Excise Duty Rate Revisions on Cigarettes
25
Table 10
Motor Vehicle Imports and New Registration of Vehicles
26
Table 11
Coverage of Product and Value of Imports Under Free Trade Agreements
27
Table 12
Special Commodity Levy Rates
28
Table 13
Performance of NBT, Stamp Duty and Motor Vehicle Registration Fees
29
Table 14
Cess Revenue from International Trade
30
Table 15
Variance Analysis of Government Revenue
31
Table 16
Performance of Government Expenditure
32
Table 17
Behavior of Yield Rates (%) on Government Securities and Exchange Rate

2014-2015
33
Table 18
Welfare Expenditure
34
Table 19
Statement on Government Treasury Cash Flow Operations
36
Table 20
Gross Domestic Borrowings by Instruments
37
Table 21
Foreign Financing Agreements Signed During (January August 2015)
38
Table 22
Foreign Finance Disbursement by Development Partner
41
Table 23
Sector vice Commitment Undisbursed Balance as at end September 2015
42
Table 24
Profitability of 55 State owned Business Enterprises (SOBEs) as at 31.08.2015
44
Table 25
Composition of Generation Capacity
46
Table 26
Levy/Dividend of State Owned Enterprises
49
Table 27
Sectoral Composition of GDP (at 2010 Constant Prices)
55
Table 28
Selected Indicators of Service Sector
61
Table 29
Performance of Tourism Sector
62
Table 30
Sectoral Distribution of GDP Growth
64
Table 31
Headline Inflation, Core Inflation and Food Inflation
67
Table 32
Movements in Capital market
68
Table 33
External Trade
72
Table 34
Key Indicators of the World Economy - 2015 (Projections)
75
iv
CHARTS
Page
Chart 1
Budget Deficit (as a % of GDP)
Chart 2
Composition of Total Revenue : Jan. -Sep. 2015
21
Chart 3
Total Revenue by Source : Jan. -Sep. 2015
22
Chart 4
Performance of Excise Duty on Major Items :Jan. Sep
25
Chart 5
Gross Domestic Borrowings by Instrument : Jan. - Sep. 2015
37
Chart 6
Foreign Financing Disbursements by Development Partners : Jan. Sep.

2015
40
Chart 7
Disbursement by Sector : Jan.- Sep. 2015
40
Chart 8
Committed Undisbursed Balance by Development Partners as at end

September 2015
43
Chart 9
GDP Growth
52
Chart 10
Composition of GDP - First Half 2015
53
Chart 11
Composition of Agriculture Sector - First Half 2015
54
Chart 12
Composition of Industry Sector - First Half 2015
58
Chart 13
Composition of Manufacturing Sector - First Half 2015
59
Chart 14
Composition of Services Sector - First Half 2015
60
Chart 15
Unemployment
65
Chart 16
Yield Rates, Monetary Aggregates and Private Sector Credit Growth
66
Chart 17
Movements in Headline, Core and Food Inflation (Based: 2006/07=100)
68
Chart 18
Trade Balance and Exchange Rate Movements
70
Chart 19
Composition of Exports
70
Chart 20
Composition of Imports
71
Chart 21
Workers Remittances by Amount, Type of Employment and Originating

Country
73
BOXES
Box 1
Box 2
Page
Income Tax Regime as at October 2015

Key Policy Measures (January October 2015)
ANNEX
Allocations Provided from the Budgetary Support Services and
Annex I
Contingent Liability Project (January- September, 2015)
List of Guarantees Issued by the General Treasury up to
Annex II
30.09.2015
Annex III Macroeconomic Indicators
Annex IV Assumptions for Revenue Estimates 2016
5
15
Page
83
97
98
107
Key Economic Indicators

Indicator
REAL SECTOR
Economic Growth
Agriculture
Industry
Services
Inflation (Point to Point)
Inflation (Average)
Unemployment Rate
Labour Force Participation Rate
FISCAL SECTOR
Budget Deficit
Total Revenue
Tax Revenue
Non Tax Revenue
Total Expenditure
Recurrent Expenditure
Public Investment
Government Debt
EXTERNAL SECTOR
Exports
Agriculture Exports
Industrial Exports
o/w Textile and Garments
Other
Imports
Consumer Goods
Intermediate Goods
o/w Petroleum Products
Investment Goods
Trade Balance
Tourist Arrivals
Earnings From Tourism
Workers' Remittances
Portfolio Investments (Net)
Overall Balance of Payments (BOP)
Gross Official Reserves
Exchange Rate (End Month)
Exchange Rate (Monthly Average)
MONETARY SECTOR
Standing Deposit Facility Rate (SDFR)
Standing Lending Facility Rate (SLFR)
Statutory Reserve Requirement (SRR)
Commercial Bank Weekly Average Weighted
Prime Lending Rate (AWPR)
Sri Lanka Inter Bank Offer Rate (SLIBOR ) (I
Month)
W.A. Yield Rate of Treasury Bills (91 Days)
W.A. Yield Rate of Treasury Bills (364 Days)
Growth in Money Supply (M2b)
Growth in Credit to the Private Sector
Period
Value
Unit
2014
2015
First Half
First Half
First Half
First Half
End Oct
End Oct
First Half
First Half
%
%
%
%
%
%
%
%
1.3
-0.7
-4.5
4.2
1.6
3.8
4.3
53.5
5.6
3.3
1.3
7.1
1.7
0.7
4.6
53.9
Jan-Sep
Jan-Sep
Jan-Sep
Jan-Sep
Jan-Sep
Jan-Sep
Jan-Sep
End June
Rs. Mn.
Rs. Mn.
Rs. Mn.
Rs. Mn.
Rs. Mn.
Rs. Mn.
Rs. Mn.
Rs. Bn.
-489,791
828,191
752,180
76,011
1,326,694
962,076
375,872
7,341
-572,991
958,892
888,241
70,651
1,532,544
1,213,087
311,442
7,938
Jan-Aug
Jan-Aug
Jan-Aug
Jan-Aug
Jan-Aug
Jan-Aug
Jan-Aug
Jan-Aug
Jan-Aug
Jan-Aug
Jan-Aug
Jan-Sep
Jan-Sep
Jan-Aug
Jan-Aug
Jan-Aug
End Aug
End Oct
Jan- Oct
US$ Mn.
US$ Mn.
US$ Mn.
US$ Mn.
US$ Mn.
US$ Mn.
US$ Mn.
US$ Mn.
US$ Mn.
US$ Mn.
US$ Mn.
No.
US$ Mn.
US$ Mn.
US$ Mn.
US$ Mn.
US$ Mn.
Rs.perUS$
Rs.per US$
7,399
1,848
5,492
3,256
2,236
12,555
2,288
7,739
3,449
2,519
-5,156
1,107,178
1,763
4,515
57
2,150
9,186
130.84
130.60
7,147
1,678
5,446
3,219
2,227
12,559
3,142
6,397
1,789
3,007
-5,412
1,315,839
2,095
4,598
8
-1,795
6,458
140.85
140.89
End Oct
End Oct
End Oct
End Oct
%
%
%
%
6.50
8.00
6.00
6.45
6.00
7.50
6.00
7.24
End Oct
6.60
6.78
End Oct
End Oct
Aug
2015/Aug
2014
Aug
2015/Aug
2014
%
%
%
6.15
6.00
12.3
6.61
7.06
16.8
2.6
21.3
vi
Reporting Requirements
Under the Fiscal Management (Responsibility) Act, No. 3 of 2003
Section
Requirement
Required Contents
Compliance
Sections 4, 5
and 6
Submission of the
Fiscal Strategy
Fiscal Strategy Statement to

increase public awareness of the
To be released to the
public and laid before
Statement *
Governments fiscal policy and
Parliament on the day of
establish standards for evaluating
the second reading of the
the conduct of the Governments
Appropriation Bill.
fiscal strategy.
Sections 7, 8
and 9
Sections 10,
11 and 12
Submission of the
Budget, Economic
The Budget, Economic and Fiscal

Position Report to set out the
To be released to the public

and placed before
and Fiscal Position
basis to evaluate the Governments
Parliament on the day of
Report *
fiscal performance as against its
the second reading of the
fiscal strategy.
Appropriation Bill.
Submission of the
Mid-year Fiscal
Mid-year Fiscal Position Report

to provide updated information

by the last day of June or
Position Report *
of the Governments fiscal
prior to the lapse of 6 months
performance pertaining to the
from the date of passing
first four months of the relevant
of the Appropriation Act,
year, to enable an evaluation of the
whichever is later; and to be
same against the Governments
placed before the Parliament
fiscal strategy.
within two weeks from the

date of such release.
Sections 13,
14 and 15
Submission of
the Final Budget
Final Budget Position Report

(Annual Report) to provide

within five months from the
Position Report
updated information of the
end of the Financial Year and
(Annual Report)*
Governments fiscal performance
placed before Parliament
pertaining to the relevant financial
within two weeks from the
year, to enable an evaluation of the
date of such release.
same against the Governments

fiscal strategy.
Sections 16,
17, 18 and 19
Submission of
Pre-election
Pre-election Budgetary Position

Report to provide updated

within three weeks of
Budgetary Position
information of the fiscal position
the publication of the
Report **
of the country.
proclamation order requiring

the holding of a general
election for the election of
Members of Parliament and
placed before Parliament
within two weeks of the first
sitting of the new Parliament.
* By the Minister of Finance

** By the Secretary to Ministry of Finance
vii
Compliance - 2015
Final Budget Position Report The Annual Report - 2014 of the Ministry of
Finance stating the fiscal and economic position of 2014 was released to the public
by end May 2015 and was soon thereafter placed before Parliament.
Mid-Year Fiscal Position Report- 2015 was released to the public by end June 2015
and was soon thereafter placed before Parliament.
Pre-election Budgetary Position Report 2015 was released to the public on 17th
July 2015 and was soon thereafter placed before Parliament.
This Fiscal Management Report-2016 contains:
Fiscal Strategy Statement-2016, setting out the Governments fiscal strategy

statement indicating the broad strategic priorities specifying key fiscal measures,
which the Government considers important for the overall fiscal policy, to be
placed before Parliament on the day of the second reading of the Appropriation
Bill.
Budget, Economic and Fiscal Position Report - 2016 setting out the basis to
evaluate the Governments fiscal performance as against its fiscal strategy, with
estimates relating to Government revenue, expenditure and Government
borrowing etc. to be placed before Parliament on the day of the second reading of
the Appropriation Bill.
viii
PART I
ix
Fiscal Strategy Statement 2016

Issued by the Hon. Minister of Finance
Under sections 4, 5 and 6 of the Fiscal Management (Responsibility) Act,
No. 3 of 2003
This report is issued under Sections 4, 5 and 6 of the Fiscal Management (Responsibility)
Act, No. 3 of 2003 where the Minister of Finance is required to present the Fiscal Strategy
Statement of the Government to the public and also lay before Parliament on the day of the
second reading of the Appropriation Bill in Parliament.
This report explains the broad strategic priorities on which the budget is based while
specifying the key fiscal measures which the Government considers important in view of
the strategy and the overall fiscal policy to be implemented.
1. MEDIUM TERM FISCAL STRATEGY

1.1 Overview
The overall fiscal policy strategy of
government has been designed to support
the broad based development objective of
improving
and
enhancing
living
standards of the people, in line with the
policy direction provided by new
government which was dawned on
January 8, 2015 and further reinforced
following the General Election on August
17, 2015. New economic policy is based on
multi disciplined economic strength
through improving local competitiveness,
international trade and investments. The
economic foundation lies on a knowledge
based Social Market Economy built on
social justice principles. The main focus
areas to foster the economy are the
availability of global opportunities for
education and strengthening the health
system. Government has earmarked the
medium term thrust areas to generate one
million
employment
opportunities,
enhance income, develop rural economies,
ensure land ownership to rural and estate
sectors, the middle class and government
employees and also create a wide and a
strong middle class in the country. To
achieve this, the importance of making a
constant refinement in policy strategies to
address risks and sustain medium term
prospects of high investment and growth
momentum with economic stability has
been recognized. In this process, the role
of local and foreign investments is critical

for providing the impetus to the
formation of capital and enhancement of
access to the markets.
Revenue enhancement lies at the centre of
the fiscal strategy. The medium term fiscal
strategy has been formulated to
consolidate budget deficit and public debt
on a sustainable basis to maintain them
within the level required to support
public outlays. Accordingly, priority has
been assigned for a sustained path of
fiscal consolidation on a combination of
expenditure rationalization and durable
revenue enhancing efforts in order to
achieve macroeconomic stability in the
country.
The overall budget deficit is expected to
reduce below 5 percent of GDP by 2018
aiming at a deficit of 3.5 percent by 2020
as per the Governments Economic Policy
Statement. The envisaged level of deficit
will also provide greater flexibility to the
Central Bank to conduct its monetary
policy towards further consolidating price
stability with lower and stable inflation.
Hence, well co-ordinated fiscal and
monetary policies will enable the country
to maintain a low and stable interest rate
and exchange rate regime that will be
conducive for a rapid and sustainable
expansion in investment and growth.
Fiscal Management Report-2016
Chart 1 : Budget Deficit as a % of GDP
% of GDP
7.0
6.2
5.6
5.4
2012
2013
5.7
5.6
2014
2015
Est.
5
4
2010
2011
1.2 Medium Term Fiscal Strategy

In line with policy direction of the
government, the overall fiscal policy
strategy has been formulated in order to
support the broad-based development
objectives in the Medium Term Macro
Fiscal Framework (MTMFF). Reduction in
fiscal deficit is to be realized in a
framework
of
maintaining
public
investment at around 5-6 percent of GDP.
The fiscal operations are guided by the
Fiscal Management (Responsibility) Act,
No. 3 of 2003, which provides a legal
framework to consolidate fiscal deficits
and associated debt while promoting
fiscal accountability. The fiscal targets are
also aimed at curtailing the underlying
deficit
in
the
revenue
account.
Consequently, revenue deficit is expected
to reduce from 1.2 percent of GDP in 2014
to 0.8 percent of GDP by 2016 and turning
into a surplus by 2017 and beyond. The
improvement in revenue account will
support the reduction in budget deficit
below 5 percent of GDP in the medium
term.
The fiscal strategy emphasizes the further
fiscal
consolidation,
achieving
macroeconomic stability to become one of

the strongest economies of Asia. Hence,
the strategy envisages to:
augment government revenue to

15_16 percent of GDP;
reduce the budget deficit to below
5 percent of GDP over 2016_2018
in a framework of maintaining
public investment at around 5_6
percent of GDP;
contain
the
outstanding
government debt to around 69
percent of GDP by 2017 and lower
it further thereafter; and
target the welfare expenditure to
protect the most vulnerable sectors
in society.
The fiscal targets envisaged in the

previous Fiscal Management Reports have
taken a longer than expected time to
accomplish
given
the
challenges
confronted in domestic as well as
international environment. The expected
tax and administrative reforms coupled
with
efficiency
gains
in
public
expenditure management are envisaged
to provide a greater fiscal consolidation in
the medium term.
Table 1: Medium Term Macro Fiscal Framework : 2015-2018

(As a percentage of GDP)
Indicator
Total Revenue and Grants
Total Revenue
Tax Revenue
Income Tax
VAT
Excise Tax
Tax on External Trade
Other
Non Tax Revenue
PC Tax Sharing & Devolved Revenue
Grants
Total Expenditure
Salaries and Wages
Interest Payments
Subsidies and Transfers
Other Goods and Services
Expenses from PC Revenue
Public Investment
o/w Roads
Education
Health
Irrigation
Transport
Revenue Deficit(-)/Surplus(+)(% of GDP)
Budget Deficit(-)/Surplus(+)(% of GDP)
Government Debt (% of GDP)
2014
12.3
12.2
10.2
1.9
2.7
2.5
2.3
0.8
1.4
0.6
0.1
18.1
13.4
4.3
4.2
3.1
1.2
0.6
4.7
1.5
0.4
0.2
0.4
0.5
-1.2
-5.7
71.8
2015
Revised
13.3
13.2
11.4
2.2
2.0
4.2
2.2
0.8
1.2
0.5
0.1
18.8
14.6
5.0
4.4
3.4
1.3
0.5
4.4
1.7
0.4
0.4
0.4
0.5
-1.4
-5.6
71.6
2016
Estimated
14.6
14.5
11.6
2.1
2.1
4.2
2.4
0.9
2.3
0.5
0.2
20.3
15.3
4.9
4.2
3.3
2.4
0.5
5.0
1.0
0.5
0.5
0.6
0.4
-0.8
-5.6
70.5
Projections
2017
2018
15.4
15.9
15.3
15.7
12.6
13.0
2.2
2.3
2.3
2.5
4.5
4.6
2.6
2.7
0.9
0.9
2.2
2.1
0.5
0.5
0.1
0.1
20.0
19.8
15.0
14.6
4.6
4.4
4.0
3.9
3.4
3.4
2.5
2.4
0.5
0.5
5.2
5.4
1.1
1.8
0.6
0.7
0.5
0.6
0.6
0.6
0.4
0.4
0.3
1.1
-4.6
-4.0
68.4
65.9
Sources: Department of Fiscal Policy and Department of National Budget
The decline in government revenue to

GDP ratio has been a major concern in the
fiscal sector over the years and it has
decelerated to 12.2 percent of GDP in 2014
from more than 20 percent achieved prior
to 1995 due to the containment of tax
revenue to GDP ratio. This decline limits
the space required for public investment.
It is expected to record a significant
improvement in tax revenue, when
present a series of tax reforms to generate
a revenue-elastic tax system and reforms
in tax administration as well. Also, the
direct tax revenue to indirect tax ratio
remains 20:80 over the years which
requires major reforms, such as
strengthening the tax management and

the removal of tax holidays and benefits
to change the ratio to 40:60 in the medium
term. Consequently, the exports to GDP
ratio has halved to 15 percent in 2014 from
30 percent in 2000, reflecting a need for a
overall competitiveness of exports while
promoting technology based exports. In
addition, the economy relies heavily on
the growth of non-tradable services sector
which shares about 60 percent to GDP led
by trade, transport, real estate and
financial services. However, the most of
services related activities have been given
tax exemptions or concessions eroding the
mobilization of government revenue.
Therefore, this requires rationalization of

exemptions in order to maintain revenue
buoyancy in the medium term.
self-compliance and efficiency gain in

achieving these targets. The buoyancy of
the tax system is expected to be improved
in
the
medium
term.
However,
uncertainty heightened in the world
economic and financial outlook stemming
from a slower than expected economic
recovery of the advanced economies,
scaled-down growth forecasts of China,
financial market volatility and geopolitical tensions in Russia and the
Middle East has ramification effects on the
fiscal sector targets. The projection on the
global economy for the medium term is
provided in Table 2.
Emphasis has also given to rationalize

these tax exemptions and concessions. The
improvement in tax administration
through a Revenue Administration
Management
Information
System
(RAMIS) at the Inland Revenue
Department (IRD) and Single Window
at the Sri Lanka Customs (SLC) and
Integrated
Treasury
Management
Information System (ITMIS) at the
General Treasury are expected to facilitate
greater
Table 2 : Summary of Key Indicators of World Economy

Indicator
Unit
GDP Growth
Advanced Economies
Emerging Market and Developing Economies
Inflation
Advanced Economies
Emerging Market and Developing Economies
Fiscal Deficit
Advanced Economies
Emerging Market and Middle Income Economies
2014
Projection
2015 2016 2020
%
1.8
4.6
2.0
4.0
2.2
4.5
1.9
5.3
1.4
5.1
0.3
5.6
1.2
5.1
2.1
4.5
-3.4
-2.5
-3.1
-4.1
-2.6
-3.9
-2.0
-2.7
% of GDP
Sources: World Economic Outlook, IMF, October 2015; Fiscal Monitor, IMF, October 2015
1.3 Reform Initiatives

In order to achieve the medium term fiscal
strategy targets, a series of focused
legislative, administrative, institutional,
social
development
and
capacity
improvement measures are being initiated
by government in a challenging economic
and volatile financial situation. These
initiatives covered reforms in the areas of
taxation, expenditure management, public
enterprises, procurement, social capacity
development and legal regulatory and
policy improvements.
Tax Reforms
Several tax measures have been taken to
address the issues in tax system in 2015.
On the income taxes, tax free allowance
for Pay-As-You-Earn (PAYE) has been
increased from Rs. 600,000 to Rs. 750,000
to relief tax payers. On the indirect taxes,
the retail and wholesale trade has brought
into the VAT net and the supply of
financial services has made liable for NBT.
VAT rate reduced to 11 percent from 12
percent; VAT registration threshold
increased to Rs. 15 million from Rs. 12
million per annum; VAT and several other
taxes applicable on the importation of
motor vehicles have been abolished as a
4
measure of consolidation of tax structure

since October 2014. Furthermore, effective
audit, tax consultation and better taxpayer
services
with
taxpayer-friendly
environment based on mutual respect and
trust have been further strengthened.
industries, at a low tax regime, and also

rate revisions of Cess and Special
Commodity Levy (SCL) to support the
domestic
value
addition
while
safeguarding the consumers have been
conducted.
Meanwhile,
the
discouragement of the consumption of
liquor and cigarettes with stringent
measures to prevent illicit liquor, drugs
and narcotics with periodic revisions
made to relevant excise duty rates will
continue to be the policy direction on such
items in future as well.
Several key measures have been

continued in international trade-related
taxes as well. The maintenance of four
band tariff system (0, 7.5 , 15 and 25),
placement of intermediate goods which
are necessary for the local value-added
Box 1 : Income Tax Regime (as at end October 2015)

Description
Tax Rate (%)
Individuals
Tax free allowance for residents/non- resident citizens of Sri Lanka
Rs. 500,000
Tax on Taxable Income

First Rs.500,000
4.0
Next Rs.500,000
8.0
Next Rs.500,000
12.0
Next Rs.500,000
16.0
Next Rs. 1,000,000
20.0
Balance
Pay-As-You-Earn (PAYE) tax is not applicable on employment income upto Rs.750,000
24.0
Tax on Taxable Income

First Rs.500,000
4.0
Next Rs.500,000
8.0
Next Rs.500,000
Balance
Tax rates for professionals (providing professional services)
Taxable income does not exceed Rs. 25 Mn.
Exceeds Rs. 25 Mn. but not exceed Rs. 35 Mn.
Exceeds Rs. 35 Mn.
For Employees who work under more than one employer
If payment does not exceeds Rs. 25,000 per month
If payment exceeds Rs. 25,000 per month
Employees of public sector who work under more than one employer
12.0
16.0
12.0
14.0
16.0
10.0
16.0
If payment does not exceeds Rs. 50,000 per month
10.0
If payment exceeds Rs. 50,000 per month
16.0
Terminal benefits from employment (Retiring gratuity etc.)
Box 1 : Income Tax Regime (as at end October 2015) Continued.

Period of service or contribution is not less than 20 years- first Rs. 5
Mn.
Period of service or contribution is less than 20 years - first Rs. 2 Mn.
Exempted
Exempted
On the next Rs. 1,000,000
5.0
On the balance
10.0
Compensation under Voluntaries Retirement Scheme (VRS)

uniformly applicable- up to Rs. 2 Mn.
Exempted
Compensation under Labour Commissioner approved scheme- upto

Rs. 2 Mn.
Non-uniform compensation for loss of employment-normal rates
Exempted
Maximum
16%
Corporate Income Tax

Standard Rate
All companies (other than companies taxed at special rates)
Not dealing in Liquor and Tobacco
28.0
Dealing in Liquor and Tobacco
40.0
Dividend Tax
10.0
Remittance Tax on Non-Resident Companies
10.0
Special Rates
Manufacturers and service providers with turnover less than Rs. 750 Mn.
12.0
Supply of services to exporters of goods or services to foreign principal
12.0
Listed company with not less than 20% of share issue to public (if tax
rate is 28% or more)
Concessionary Rate
1/2 of the tax rate
Undertaking carried-on in Sri Lanka (Operation and maintenance of

storage facilities)
Development of software
Exports with 65 percent value addition
Employees' Trust Fund and Provident or Pension Funds
Provided funds and Charities
Unit Trust or Mutual Fund and Unit Trust Management Company
10.0
Clubs and Associations

Poultry
Supply of labour
Educational services
Venture Capital Companies
Small Companies (taxable income not exceeding Rs. 5 Mn.)
Agriculture
12.0
Manufacturing animal feed
Box 1 : Income Tax Regime (as at end October 2015) Continued.

Promotion of tourism
Construction works
Healthcare services
Qualified Export Profits
Non-citizen entertainer or artist
Livestock
Profits and income from petroleum exploration of any person or partner
of a partnership
Exports and deemed exports
Other
Partnerships tax on divisible profits
8.0
Co-operative societies
Exempted
Non-Governmental Organizations (3% of the fund received is deemed to

be profit)
28.0
Compiled by the Department of Fiscal Policy
Reform in Tax Administration

Government has clearly identified the
necessity of improving tax administration
to realize the envisaged outcome from tax
policy reforms. In line with this, tax policy
reforms are being complemented by the
introduction of measures to improve tax
administration.
Emphasis has been given to improve tax
administration in tax collection agencies,
such as the IRD and the SLC. The IRD is
in the process of finalizing RAMIS
whereas the SLC is in the process of
introducing Single Window (SW)
system as a one-stop gateway of handling
all documents at one place enabling users
to submit their export and import
documents through a single electronic
gateway. Meanwhile, ITMIS will cater to
the requirements of the General Treasury
by
automation
of
revenue
and
expenditure management. Conversely,
the Fiscal Management Efficiency Project
(FMEP) will improve skills and

knowledge of the public sector managers.
Public Expenditure Management
Encouraging appropriate prioritization to
enable
the
governments
financial
resources to manage prudently while
improving fiscal discipline is expected to
continue. The recent reduction in
unemployment, poverty and inflation
with
continued
improvement
in
livelihood opportunities will help target
the welfare expenditure. Rigorous
monitoring of expenditure on defence,
interest payments, salaries and wages and
other goods and services will also help
maintain the recurrent expenditure at a
desired level. In addition, the estimation
and budget making process is being
improved with the wider participation of
the stakeholder and the general public.
Through this process, it is expected to
inculcate the culture of working within
the available resource envelope of
government.
Furthermore,
financial
regulations are being revisited to

introduce necessary revisions to make
them suitable for financial management
with good governance initiatives.
The need for a new system to improve
expenditure management has been
recognized and also cadre management
continued with a renewed effort. The
ITMIS is to implement introduction of
new technology for the improvement of
the fiscal management process. Efforts are
being made to keep the operational
expenditure on check while prioritizing
much needed public investment to
support the growth momentum of the
economy.
The
curtailment
of
unproductive expenditure is also given
priority. A number of measures are being
taken to improve accountability in public
sector, particularly in public procurement.
The commitment to ensure the social
protection of the most vulnerable and the
needy, including the elderly population
and
differently-abled
people
with
targeting related expenditure, is an
important element of the MTMFF.
State Owned Business Enterprises
The underperformance of the State
Owned Business Enterprises (SOBEs) has
severely affected the growth prospects in
the economy. Hence, emphasis has also
been given to the requirements of market
based structural reforms and commitment
to reinvigorate key initiatives taken by
government. The current fiscal strategy
places strong emphasis on improving the
performance and efficiency of SOBEs to
adopt innovative management reforms to
become commercially viable entities. A
State Holding Corporation Limited
(SHCL) will be established to manage
SOBEs in line with Temasek model in
Singapore enabling to take bold decision

based on financial guidelines and market
economies as in the private sector.
Putting SOBEs on such a commercial
footing,
the
cost-reflective
price
adjustments are introduced.
In the long-run, social protection
objectives can be entertained by targeted
income transfers rather than allocating
unbearable amount of subsidies to the
SOBEs. In addition, reforms in areas, such
as financial and business management,
systems and procedures, internal controls
and productive use of employees and
capital assets etc. are given priority.
Investment
Government put in place a public
investment programme on infrastructure
development while encouraging private
sector participation for employment
generation activities. Also, local and
foreign investors will be connected to
engage in businesses. Enhanced resources
are being channeled to maintaining
government support to rural economy,
agriculture,
Small
and
Medium
Enterprises (SMEs), education, health and
protection of the vulnerable segments of
the society. The public investment is
expected to maintain to around 56
percent of GDP in the medium term basis.
Meanwhile,
2,500
State
Rural
Development Centres (SRDC) will be
established under one development
umbrella to strengthen and build
infrastructural facilities, such as roads and
markets at village level.
Debt Management
The main objective of the governments
debt management strategy is to reduce
government debt to GDP ratio to a risk
free level. By 2017, the debt to GDP ratio

is targeted to reduce below 69 percent
with the expected lower fiscal deficit and
anticipated higher economic growth of
over 7_8 percent. The debt management
policy is to focus on making borrowings
at the lowest possible cost.
1.4 The Global Economic Condition and
its Impact on Sri Lanka
The global economic recovery remains
hostile with heightened uncertainties the
backdrop of increased interest rates in the
United States (US) and economic
slowdown in China. As such, Sri Lankan
economy will have both positive and
negative impacts. A significant positive
impact will be the lowering of the import
costs and import-fuelled inflation due to
the decline in oil prices, which provides a
cushion for the fiscal balance. However,
subdued performance in the advanced
economies, such as the US and Euro
economies could curtail the demand for
Sri
Lankan
exports.
Therefore,
continuation of more flexibility in the
exchange rate and introduction of other
structural measures are needed to
stimulate exports.
1.5 Medium Term Strategic Priorities of
the Fiscal Policy
Augmenting the revenue with greater
emphasis on the expansion of tax
base
Strengthening tax administration to
support the enforcement through
automation
Increase the ratio of direct tax to
indirect tax revenue generation to
40:60 from 20:80.
Strengthening
institutional
and
human resources in the revenue
agencies
Rationalizing
non-interest
expenditure and curtail unproductive
expenditure
Encouraging line Ministries to work
on a medium term framework to
effectively
manage
available
resources and improve the quality of
operational expenditure through
advancement
of
treasury
management
and
procurement
system
Strengthening regional/rural centric
infrastructure
and
industrial
development activities
Completing
the
strategic
infrastructure development projects
and other national economic and
social infrastructure development
projects
Consolidating public security to
ensure peaceful environment in the
country
Strengthening
the
livelihood
development activities to empower
the poor while providing social
protection for the vulnerable people
in the society
Improving the human capital to
increase productivity of the labour
force
Maintaining public debt at prudent
levels with strengthened fiscal
consolidation
and
improved
management of public debt
Improving fiscal transparency and
accountability
1.6 Key Fiscal Measures for the

Improvement of Overall Fiscal Policy
Implementation
Streamlining and consolidating tax

policy to broaden the tax base and
simplify the tax system to augment
the revenue
Taking measures to minimize tax
evasion and avoidance through
strengthening legal and regulatory
framework
Integrating RAMIS and ITMIS for
an effective management of
revenue
Supporting to SMEs and micro
enterprises
to
generate
employments and
engage in
import replacement economic
activities
Continuation of the income
support programme to vulnerable
and the needy people
Improving
government
cash
management programme
Making SOBEs financially viable
entities through market based
structural reforms
Ensuring the effective utilization
of
foreign
resources
while
ensuring a proper mix of domestic
and
foreign
debt
in
the
government borrowing
10
Part II
11
Budget, Economic and Fiscal Position Report - 2016

Issued by the Hon. Minister of Finance
Under Sections 7, 8 and 9 of the Fiscal Management
(Responsibility) Act, No. 3 of 2003
This Report is issued under Sections 7, 8 and 9 of the Fiscal Management

(Responsibility) Act, No. 3 of 2003, which requires the provision of a basis for
the evaluation of governments fiscal performance as against its fiscal strategy
statement and to be placed before Parliament on the day of the second reading
of the Appropriation Bill. It includes estimates relating to gross domestic
product, consumer prices, balance of payments, and assumptions based for
estimating revenue and expenditure.
Accordingly, this Report contains provisional figures of government revenue,
expenditure and borrowing in the first nine months of 2015. This Report also
provides key macroeconomic developments during this period to facilitate the
understanding of the overall economic situation within which fiscal operations
have been conducted. This Report also refers to the basis of information on
economic and other assumptions used in preparation of estimates for 2016 and
downside risks associated with these assumptions and other information that
may have a material effect on the fiscal performance of the government.
12
1. FISCAL DEVELOPMENTS
1.1 Overview
Fiscal reforms introduced in the first nine
months of 2015 further strengthened Sri
Lankas fiscal consolidation process, in
comparison to the same period of 2014
with increased tax revenue and improved
management of public expenditure.
The domestic consumption-based taxes
increased by 19 percent to Rs. 250 billion
in the first nine months of 2015, in
comparison to Rs. 210 billion during the
corresponding period of 2014. The
revenue from VAT on domestic activities
declined by 5.4 percent to Rs. 97 billion,
reflecting the decrease of VAT rate to 11
percent from 12 percent in January 2015
and increase of VAT registration
threshold to Rs. 15 million per annum
from Rs. 12 million per annum along with
the policy measures taken to abolish VAT
applicable for the manufacturing of
liquor, tobacco and cigarettes as a
measure of consolidation of tax structure
since October 2014. The Nation Building
Tax (NBT) on domestic activities
marginally decreased by 1.2 percent to Rs.
19 billion during the first nine months of
2015. This was mainly due to increased
NBT registration threshold to Rs. 15
million per annum coupled with the
policy measures taken to abolish NBT
applicable for the manufacturing of
liquor, tobacco and cigarettes. However,
growth in wholesale and retail sector,
manufacturing products, sale of food
items and banking and financial services
contributed positively to the revenue.
Meanwhile, total revenue from excise
duty on liquor and cigarettes recorded a
growth of 53.1 percent and 50.4 percent,
respectively in the reference period
reflecting the increase of excise duty rates

coupled with the enhanced production of
liquor and cigarettes.
The import based-taxes also increased by
27 percent due to the rise of imports of
consumption goods, including motor
vehicles. The revenue from excise tax,
primarily imposed on motor vehicles,
significantly increased by 143.9 percent to
Rs. 171 billion in the reference period, in
comparison to Rs. 70 billion recorded in
same period of 2014 benefiting from
increased imports of motor vehicles by 55
percent mainly due to the reduction of
taxes on 1000 cc motor cars and the
imposition of excise duty on motor
vehicles as a composite tax in place of
other taxes. Meanwhile, the VAT revenue
from imports declined by 33.3 percent and
NBT revenue from imports marginally
declined by 3.0 percent mainly due to the
consolidation of tax structure. The
revenue from import duties increased by
23.5 percent to Rs. 73 billion, reflecting a
moderate increase on imports, more
specially consumer goods and investment
goods in the review period. Special
Commodity Levy (SCL) collected at the
point of imports reflected a marginal
increase of 2.2 percent during this period
mainly due to the increase in number of
products coming under the SCL and
upward revisions of applicable rates to
encourage
domestic
agricultural
production. The revenue from Ports and
Airports Development Levy (PAL)
decreased by 17.3 percent to Rs. 39 billion
due to the abolishment of PAL on
importation of motor vehicles.
13
In the context of direct taxes, the revenue

from Pay-As-You-Earn (PAYE) tax
increased by 16.3 percent to Rs. 19 billion
from Rs. 17 billion due to a higher wage
income and enhanced employment in
high earning categories in sectors, such as
banks, professional services, export trade
coupled with improvement in tax
compliance. However, tax on interest
income declined by 22.9 percent to Rs. 48
billion during the first nine months of
2015 reflecting the reduction of issuance
of the Treasury bonds and bills during the
period concerned. Hence, the total
revenue collected from income tax
marginally fell by 1.0 percent to Rs. 154
billion in the first nine months of 2015, in
comparison to Rs. 156 billion recorded

during the corresponding period of 2014.
The revenue from corporate and noncorporate tax increased by 14.2 percent to
Rs. 82 billion during the period due to
increased domestic economic activities. In
contrast, the Economic Service Charge
(ESC) declined by 1.0 percent to Rs. 4
billion in the reference period.
Meanwhile,
the
non-tax
revenue
during this period. The profits and
dividends from State Owned Business
Enterprises (SOBEs) and state banks, fees
and charges and social
security
contributions recorded a moderate
growth while the interest and rent income
declined.
Table 3 : Summary of the Budget

(Rs. Million)
Item
Revenue and Grants
Revenue
Tax
Non Tax
Grants
Expenditure
Recurrent
Salaries
Interest Payments
Other
Public Investments
Other
Revenue Deficit (-)/Surplus (+)
Overall Budget Deficit (-)/Surplus (+)
Financing
Foreign Financing (Net)
Domestic Financing (Net)
Jan. - Sep.
2014
836,903
828,191
752,180
76,011
8,712
1,326,694
962,076
305,594
363,489
292,993
375,872
-11,254
-133,885
-489,791
489,791
244,581
245,210
2015 (a)
959,553
958,892
888,241
70,651
661
1,532,544
1,213,087
414,764
426,550
371,773
311,442
8,015
-254,195
-572,991
572,991
21,144
551,847
Source: Department of Fiscal Policy

(a) Provisional
14
The government expenditure during the

first nine months of 2015 was Rs. 1,532.5
billon in comparison to Rs. 1,326.7 billion
recorded during the corresponding period
of 2014. The total expenditure included
recurrent expenditure of Rs. 1,213.1 billion
and capital expenditure of Rs. 319 billion.
The recurrent expenditure increased by
26.1 percent whereas capital expenditure
declined by 12.4 percent in the review
period.
The public investment during the period
under consideration mainly focused on
expediting
economic
infrastructure
development activities in the areas of
roads and bridges, power generation,
irrigation and water supply. In addition,
priority was given for social infrastructure
development activities, such as education,
health and social welfare development
programme. The expenditure on public
investment during the first nine months of
2015 accounted to Rs. 311.4 billion, a 17.1
percent decline over the same period of
2014.
Reflecting these developments, the
revenue deficit during the first nine
months of 2015 was Rs. 254.2 billion,

compared to Rs. 133.9 billion in the
corresponding period of 2014. The overall
budget deficit was Rs. 573.0 billion during
the first nine months of 2015, in
comparison to Rs 489.8 billion in the
corresponding period of 2014. The public
expenditure is being monitored closely in
order to ensure that it operates within the
overall budgetary ceiling. The budget
deficit is estimated at 5.6 percent of GDP
in 2015.
Several initiatives have been taken during
first nine months of 2015 to strengthen the
tax administration while streamlining the
tax system. Revenue Administration
Management
Information
System
(RAMIS) of the Inland Revenue
Department (IRD) is expected to
operationalize by end 2015. In addition,
the Sri Lanka Customs (SLC) has
introduced a Single Window (SW)
facility to increase efficiency of its
administration, procedures and logistics
associated with trade while the General
Treasury is in the process of finalizing the
Integrated
Treasury
Management
Information System (ITMIS) to ensure
efficient management of government
resources.
Box 2: Major Fiscal Measures; January October 20151

Effective Date
30.01.2015
27.02.2015
01.01.2015
Measures
Excise (Special Provisions)
Excise (Special Provisions) duty rates on motor vehicles with engine capacity
less than 1,000 cc and also electric cars were reduced by 15 percent. Duty rates
on hybrid motor vehicles with less than 3000cc and above were increased by
30 percent and 60 percent, respectively.
Excise (Special Provisions) duty on buses was imposed.
Excise Ordinance
Annual liquor license fees on wholesale and retail outlets, hotels, hotel bars,
rest houses etc. were revised upwards.
This comprises of major fiscal policy measures implemented in January October 2015.
15
03.10.2015
01.01.2015
01.01.2015
30.01.2015
06.05.2015
01.01.2015
22.01.2015
30.01.2015
Excise duties on hard liquor, beer and cigarettes were increased.

Betting and Gaming Levy
Betting and Gaming Levy applicable for gross collection was increased to 10
percent from 5 percent.
An entry fee of US$ 100 was introduced on every person who enters casino
entertainment activity.
VAT/NBT/PAYE
The rate of VAT was reduced to 11 percent from 12 percent.
The importation of machinery, equipment and spare parts by Sri Lanka Ports
Authority (SLPA) to be used exclusively within specified ports was exempted
from the VAT and the NBT.
The limit of the sample value for the exemption from the VAT and NBT of Rs.
25,000 was increased to Rs. 50,000.
The turnover applicable for the imposition of VAT on wholesale or retail trade
was reduced to Rs. 100 Mn. from Rs 250 Mn. for a consecutive period of 3
months of any calendar year.
The VAT registration threshold was increased to Rs. 15 Mn. per annum from
Rs. 12 Mn. per annum.
The NBT threshold was increased to Rs. 3.75 Mn. per quarter from Rs. 3 Mn.
per quarter.
The threshold for the Pay-as-You-Earned (PAYE) tax was increased to Rs.
750,000 from Rs. 600,000 and maximum rate of the PAYE tax was reduced to
16 percent from 24 percent.
Concessionary rate of 12 percent applicable for agricultural sector was
extended to the local sugar industry.
Customs Duty
Customs duty on wheat grain of Rs. 10 per kg was removed.
Importation of cement and semi-finished products of iron or non-alloy steel
was exempted from custom duty.
Custom duty on rice was re-introduced by Rs. 35 per kg.
Special Commodity Levy
SCL on B onion was reduced to Rs.10 per kg from Rs. 50 per kg for a period of
four months.
SCL on rice was increased to Rs. 20 per kg from Rs. 1 per kg for a period of
four months.
SCL rates on following food items were reduced under the 100 Day
Programme:
- Maldives fish by Rs. 200 per kg to Rs. 102 per kg
- Sprats by Rs.15 per kg to Rs. 11 per kg
- Green gram by Rs. 30 per kg to Rs. 10 per kg
- Black grams by Rs. 50 per kg to Rs. 60 per kg
- Black grams flour by Rs. 100 per kg to Rs. 200 per kg
- Chilies (crushed or ground) by Rs. 25 per kg to Rs. 125 per kg
- Sugar by Rs. 10 per kg to Rs. 18 per kg
- Coriander(seeds) by Rs. 20 per kg to Rs. 26 per kg
- Coriander(crushed or ground) by Rs. 150 per kg to Rs. 52 per kg
- Turmeric by Rs. 100 per kg to Rs. 102 per kg
16
15.02.2015
25.02.2015
- Turmeric (crushed or ground) by Rs. 150 per kg to Rs. 360 per kg

- Canned Fish by Rs. 52 per kg to Rs. 50 per kg
SCL on potatoes was increased by Rs. 30 per kg to Rs. 40 per kg and SCL on
mackerel fish was extended for another four months.
The validity period of SCL on peas, chickpeas, cowpea, lentils, kurakkan and
margarine was extended for a period of six months.
18.03.2015
SCL on mackerel fish was reduced by Rs. 4 per kg to Rs. 6 per kg for a period
of six months.
26.03.2015
SCL on rice was increased by Rs. 20 per kg to Rs. 40 per kg for a period of four
months.
The validity period of SCL on another 17 items including fish, dried fish,
garlic, red onion, grapes, apple, orange, vegetable oil etc. was extended.
02.04.2015
24.04.2015
SCL on following food items was increased for a period of four months:
- Potatoes from Rs. 40 per kg to Rs. 55 per kg
- Bonion from Rs.10 per kg to Rs. 30 per kg
06.05.2015
SCL on rice was removed.
06.06.2015
SCL on following food items was reduced for a period of three months:
- B Onion from Rs. 30 per kg to Rs. 10 per kg
17.06.2015
SCL on following food items was revised;

- Spilt lentils from Rs. 5 per kg to Rs. 0.25 per kg
- Palm oil from Rs. 90 per kg to Rs. 105 per kg
SCL on maize was introduced at the rate of 10 percent for a period of four
months.
SCL on vegetable oil was reduced by Rs. 15 per kg to Rs. 90 per kg and the
validity period for ten commodity items including Maldives fish, sprats, green
gram, black gram, chilies, coriander, turmeric etc. was extended for a period of
six months.
SCL on the following food items was increased:
- Sugar from Rs. 18 per kg to Rs. 30 per kg
The validity period on Bonions, peas, chick peas, cowpeas, lentils, kurakkan
and margarine was extended for a period of six months.
The validity period of SCL on mackerel fish was extended for a period of six
months.
Surcharge of Rs. 20 per kg for Bonion was introduced for a period of sixteen
days.
SCL on the following food items was increased:
- Crude palm oil from Rs. 90 per kg to Rs. 110 per kg
- Refine oil from Rs. 110 per kg to Rs. 130 per kg
The validity period of SCL on 16 items including fish, dried fish, red onion,
garlic, apple, orange, grapes, etc. was extended for a period of six months.
Administrative Changes
29.06.2015
21.07.2015
08.09.2015
17.09.2015
22.09.2015
23.09.2015
02.10.2015
22.01.2015
The retail prices of major petroleum products were reduced:

- Petrol (92 Octane) by Rs. 33 to Rs. 117 per litre
17
30.01.2015
30.01.2015
10.02.2015
15.07.2015
22.09.2015
- Petrol (95 Octane) by Rs. 30 to Rs. 128 per litre

- Auto Diesel by Rs. 16 to Rs. 95 per litre
- Super Diesel by Rs. 23 to Rs. 110 per litre
- Kerosene by Rs. 16 to Rs. 65 per litre
The retail price of Kerosene was reduced by Rs. 6 to Rs. 59 per litre.
Maximum retail price of 400 gram of full cream milk powder was reduced by
Rs. 61 to Rs. 325 and price of the one kg pack was reduced to Rs. 810.
Domestic gas prices were reduced by Rs. 300 to Rs. 1,596 for a 12.5 kg cylinder.
Method of Customs valuation of motor vehicles was revised (Gazette No .
1899/35)
Method of Customs valuation of motor vehicles was further revised (Gazette
No . 1901/3)
Domestic gas prices were further reduced by Rs. 100 to Rs. 1,496 for a 12.5 kg
cylinder.
Method of Customs valuation of motor vehicles was further revised (Gazette
No . 1933/16)
Taxes introduced under the Finance Act
-Bars and Taverns Levy (BTL) was imposed as a one-off tax of Rs. 250,000 on
holders of a license issued under Excise Ordinance.
-Supper Gain Tax (SGT) was imposed on individuals or companies whose
profit before tax for the year of assessment exceeds Rs. 2,000 Mn. commencing
on 01.04.2013. Tax is charged at the rate of 25 percent of the taxable income.
-Mobile Telephone Operator Levy (MTOL) was imposed on licensed mobile
telephone operators as one-off tax of Rs. 250 Mn.
-Satellite Location Levy (SLL) on persons who own satellite locations was
imposed as one-off tax of Rs. 1,000 Mn.
-Dedicated Sports Channel Levy (DSCL) on sports channels operated under
the Rupavahini Corporation Act, No. 6 of 1982 was imposed as one-off tax of
Rs. 1,000 Mn.
-Mansion Tax (MT) on owners of mansions within the meaning of Finance Act,
was imposed amounting Rs. 1 Mn. per annum.
-Migration Tax on Sri Lankan citizens migrating permanently was imposed at
a rate of 20 percent on foreign exchange brought out of the country.
-Casino Industry Levy on persons who are engaged in casino business was
imposed as one-off tax of Rs. 1,000 Mn.
The current fiscal strategy places strong

emphasis on improving the performance
and efficiency of the key State Owned
Business Enterprises (SOBEs). Two such
key enterprises in the energy sector, i.e.
the Ceylon Petroleum Corporation (CPC)
and the Ceylon Electricity Board (CEB)
are in the process of addressing their
financial imbalances. The CPC recorded a
loss of Rs. 4.9 billion at the end of August
2015. In order to strengthen the financial

position of the CPC, the General Treasury
has proposed to issue Treasury bonds
totaling Rs. 100 billion in 2015. The CEB
recorded a profit of Rs. 14.6 billion during
first eight months of 2015 benefiting from
increased hydropower generation due to
the
favorable
weather
conditions
prevailed and effective functioning of coal
power plants. As a result, the electricity
18
generation cost per unit has declined by

31.4 percent to Rs. 13.82 kWh in the first
eight months in 2015, compared to Rs.
20.15 kWh in 2014.
Meanwhile, Sri Lankan economy grew by
5.6 percent during the first half of 2015,
compared to 1.3 percent recorded in the
same period of 2014. The higher economic
growth was supported by domestic
demand benefiting from the favorable
macroeconomic
environment
and
peaceful situation of the country with
good governance initiatives. This buoyant
growth was primarily driven by the
Services sector which expanded by 7.1
percent supported by the Agriculture
sector which grew by 3.3 percent and the
Industry sector which grew by 1.3
percent.
The headline inflation, on a year-onyear
basis, as measured by the Colombo
Consumer Price Index (CCPI - 2006/07
base year) was a deflation of -0.3 percent
for the third consecutive month in
September 2015. In contrast, the headline

inflation, on yearon-year basis, increased
to 1.7 percent in October 2015.The
headline inflation, on an annual average
basis, was 0.7 percent in October 2015,
compared to 3.8 percent by end October
2014. The headline inflation is expected to
remain within 2.0 to 3.0 per cent by end
2015 with improved domestic supply
conditions
and
subdued
global
commodity prices.
The overall performance of the external
sector showed a mixed performance with
a widened trade deficit and enhanced
inflows from workers remittances and
earnings from tourism. The trade deficit
increased by 5.0 percent to US$ 5,412
million during the first eight months of
2015 from US$ 5,156 million in the same
period of 2014 as a result of increased
expenditure on imports by US$ 3.0 million
to US$ 12,558 million and marginal
declined export earnings by 3.4 percent to
US$ 7,146 million during this period.
19
Table 4 : Estimated and Actual Revenue and Expenditure : 2015

(Rs. Billion)
Jan. - Sep.
Item
Deviation
Estimated
Actual (a)
Total Revenue
1,005
959
-46.4
Tax Revenue
924
888
-36.3
Tax on Income and Profit
186
154
-31.3
VAT - Domestic (Net)
109
97
-12.6
23
19
-3.4
-1.5
322
274
-48.8
Import Duty
68
74
5.9
VAT - Imports (Net)
99
65
-33.2
Nation Building Tax (Import)
13
11
-1.6
Ports & Airports Development Levy (PAL)
56
39
-17.0
Cess Levy
34
32
-2.3
Special Commodity Levy & Other
44
38
-6.1
186
255
69.2
Cigarettes
53
60
7.1
Petroleum
38
22
-15.5
Motor Vehicles & Other
96
173
77.5
499
514
14.6
Liquor/Tobacco
73
74
1.6
Sub Total
73
74
1.6
29
24
-5.0
1.3
31
27
-3.6
81
71
-10.1
1,522
1,532
10.1
1,172
1,213
40.7
Salaries and Wages
425
415
-10.2
Interest Payments
360
427
66.6
Pension Payments
130
115
-15.1
42
44
2.4
215
212
-3.0
350
319
-30.6
Inland Revenue Department
Nation Building Tax (Domestic)

Other
Sub Total
Customs Department
Excise (Special Provisions)
Sub Total
Excise Department
Other
Telecommunication Levy
License Fees& Other
Sub Total
Non Tax Revenue
Total Expenditure
Transfers to Public Corporations & Institutions

Other
Capital Expenditure and Net Lending
Sources: Department of Treasury Operations and Department of Fiscal Policy
(a) Provisional
20
The overall Balance of Payments (BOP)

recorded a deficit of US$ 1,795 million
during the first eight months of 2015, in
comparison to a surplus of US$ 2,150
million
recorded
during
the
corresponding period of 2014. However,
the workers remittances increased by 1.8
percent to US$ 4,598 million while
earnings from tourism also increased by
17.1 percent to US$ 1,867 million during
the first eight months of 2015. These
developments coupled with the adoption
of greater flexibility in the exchange rate,
are expected to reduce the trade deficit
further while improving the countrys
gross
official
reserves,
thereby
strengthening the external stability of the
Sri Lankan economy.
1.2 Government Revenue

Total government revenue comprising of
tax and non-tax revenue increased by 15.8
percent to Rs. 959 billion during the first
nine months of 2015, compared to the
same period of 2014. Tax revenue
in the first nine months of 2015 whereas
non-tax revenue decreased by 7.1 percent
to Rs. 71 billion in the reference period.
Chart 2 : Composition of Total Revenue

Jan. -Sep. 2015
VAT
17%
Income Tax
16%
Non Tax
8%
Other
3%
Cess
3% SCL
4%
Import Duty
8%
The revenue from VAT and NBT

decreased by 19.1 percent and 1.8 percent,
respectively during the first nine months
of 2015, compared to the same period of
2014 due to the introduction of composite
taxes in place of VAT, NBT and several
other taxes. Reflecting this impact, VAT
revenue on domestic economic activities
while the revenue from import VAT
decreased by 33.3 percent to Rs. 65 billion.
As a result, excise tax revenue increased
by 99.6 percent to Rs. 329 billion in the
reference period, compared to same
Excise
34%
PAL
4%
NBT
3%
period of 2014 stemming from increased

excise tax revenue from the import of
motor vehicles by 143.9 percent to Rs. 171
billion in the review period.
The increase in the import of consumer
goods by 37.3 percent impacted positively
on the import based taxes, such as import
duties, Special Commodity Levy (SCL)
and Cess. The revenue from import
duties, Cess and SCL increased by 23.5
percent, 15.4 percent and 2.2 percent,
respectively during the first nine months
of 2015.
21
Table 5 : Summary of Performance of Government Revenue

(Rs. Million)
Jan. -Sep.
2014
2015 (a)
Change
(%)
752,181
155,841
209,931
102,366
88,085
19,480
357,484
59,497
98,010
11,675
47,124
36,862
76,831
27,485
28,925
76,011
828,191
888,242
154,315
249,835
96,792
133,793
19,250
453,948
73,501
65,382
11,329
38,959
37,661
195,407
31,709
30,144
70,651
958,892
18.1
-1.0
19.0
-5.4
51.9
-1.2
27.0
23.5
-33.3
-3.0
-17.3
2.2
154.3
15.4
4.2
-7.1
15.8
Item
Tax Revenue
Income Tax
Domestic Consumption Based Tax
VAT
Excise Tax
Nation Building Tax (NBT)
Import Based Tax
Custom Duty
VAT
Ports & Airports Development Levy (PAL)
Special Commodity Levy (SCL)
Excise Tax
Cess
License Fees and Other
Non Tax Revenue
Total Revenue
Sources: Department of Treasury Operations and Department of Fiscal Policy

(a) Provisional
Revenue from corporate and noncorporate income tax and Pay-As-YouEarn (PAYE) tax increased by 14.2 percent
and 16.3 percent, respectively during the
first nine months of 2015 whereas the tax
revenue from Withholding Tax (WHT) on
interest income and Economic Service

Charge (ESC) declined by 22.9 percent
and 0.9 percent, respectively. Limited
issuance of Treasury Bills and Bonds was
mainly attributed to the drop in revenue
from WHT.
Chart 3 : Total Revenue by Source

Jan. - Sep. 2015
Import Base
Tax
51%
Domestic
Cosumption
Base Tax
28%
Income Tax
17%
License Taxes
and Other
4%
22
Income Tax
The tax revenue from income tax,
consisting of corporate and non-corporate
tax, Pay-As-You-Earn (PAYE), tax on
interest and Economic Service Charge
(ESC), fell by 1.0 percent to Rs. 154.3
2015, compared to Rs. 155.8 billion in the
same period of 2014. Except the tax on
interest and ESC, all the other taxes
positively contributed to generate income
tax revenue.
reflecting enhancement of the respective

economic activities.
During the first nine months of 2015, the

corporate and non-corporate tax revenue
increased by 14.2 percent to Rs. 82.1
billion, compared to the same period of
2014. Communication, electricity, food,
wearing apparel, garments tailoring and
related
services
and
investment
companies mainly contributed to the
growth in corporate tax revenue,
However, the revenue from tax on interest

income declined by 22.9 percent to Rs.
48.3 billion mainly due to the relatively
lower issuance of domestic debt securities
in the first nine months of 2015. The tax
on ESC declined by 0.9 percent to Rs. 4.5
2015, reflecting the reduction of claims by
companies which made losses or claimed
exemptions as the ESC.
The revenue of Rs. 19.4 billion from PAYE

tax was collected during the first nine
months of 2015 and it was an increase of
16.3 percent, compared to Rs. 16.7 billion
during the same period of 2014 due to the
higher salaries and wages and increased
employment in sectors, such as transport,
banking, port services and agriculture.
Table 6 : Performance of Income Tax

(Rs. Million)
Tax Base
Corporate and Non Corporate
PAYE
Tax on Interest Income
Economic Service Charge
Total
Jan. - Sep.
2014
2015 (a)
71,895
82,073
16,717
19,439
62,724
48,337
4,506
4,465
155,841
154,314
Growth
(%)
14.2
16.3
-22.9
-0.9
-1.0

(a) Provisional
Value Added Tax (VAT)

The revenue from VAT, on a gross basis,
decreased by 19.0 percent to Rs. 163
2015, compared to the same period of
2014.The revenue from VAT on domestic
activities as well as imports declined. This
was due to the reduction of VAT rate

from 12 percent to 11 percent with effect
from January 2015, following the policy
decision to simplify the tax system by
consolidating VAT and NBT with excise
duty and the increase VAT registration
thresholds from Rs. 12 million per annum
23
to Rs. 15 million per annum. VAT revenue

on domestic activities dropped by 5.5
percent to Rs. 97 billion in the reference
period due to the contraction of VAT
revenue from sectors, such as fishing and
aquarium, mining and quarrying, coconut
industry, paddy and other cereals.
VAT revenue on imports also decreased

by 33.2 percent to Rs. 66 billion during the
first nine months of 2015, in comparison
to the corresponding period of 2014. This
reflects the consolidation of VAT and
several other taxes with excise duty
amidst the increase in import VAT
revenue from consumer and investment
goods imports.
Table 7 : Performance of VAT

Tax Base
Domestic
Imports
Gross Revenue
Refunds
Net Revenue
Refunds as % of Gross Revenue
Jan. - Sep.
2014
2015 (a)
102,506
96,916
98,568
65,875
201,074
162,791
698
617
200,376
162,175
0.35
0.38
(Rs. Million)
Growth
(% )
-5.5
-33.2
-19.0
-11.6
-19.1
Source : Department of Fiscal Policy

(a) Provisional
Excise Taxes
Total excise tax revenue generated from
excise duty on liquor, cigarettes and
tobacco, petroleum, motor vehicles and
other items significantly increased by 100
percent to Rs. 329 billion in the reference
period, compared to Rs. 165 billion in the
same period of 2014. All excisable items

including motor vehicles positively
contributed to this growth mainly due to
the imposition of excise duty on motor
vehicles and other excisable articles in
place of several other taxes such as VAT,
NBT and import duty since October 2014.
Table 8 : Performance of Excise Duty

(Rs. Million)
Tax Base
Liquor
Cigarettes and Tobacco
Motor Vehicles
Petroleum
Other
Total
Jan. - Sep.
2014
2015 (a)
48,411
74,130
39,674
59,663
69,956
170,630
4,675
22,049
2,201
2,728
164,917
329,199
Growth
(% )
53.1
50.4
143.9
371.6
23.9
99.6

(a) Provisional
24
The revenue from hard liquor increased

significantly by 54 percent in the review
period, with the increase of production of
hard liquor by 15.3 percent coupled with
increased excise duty on coconut and
processed arrack and country made
foreign spirit. The revenue from malt

liquor also increased by 55.5 percent
benefiting from the rise of production of
malt liquor by 9.4 percent and the increase
of duty rates of malt liquor in the
reference
period.
Rs. Billion.
Chart 4 : Performance of Excise Duty on

Major Items
(January -September)
200
150
100
50
0
Liquor
Cigarettes
and Tobacco
2014
Meanwhile, the revenue generated from

cigarettes and tobacco significantly
increased by 50 percent to Rs. 59.7 billon
during January to September 2015 due to
Motor
Vehicles
Petroleum
2015
the upward revision of excise duty on

cigarettes and increased production of
tobacco by 17 percent in the review
period.
Table 9: Excise Duty Rate Revisions on Cigarettes (Rs. per 1,000 Sticks)
Category
Cigarettes each not
exceeding 60mm in length
(eg. CAPSTAN, THREE
ROSES)
Cigarettes each exceeding
60mm but not exceeding
67mm in length (eg. FOUR
ACES)
72mm in length (eg. PALL
MALL)
84mm in length (eg. GOLD
LEAF)
84mm in length
2010
Oct
3,425
2010
Nov
3,440
2011
Jan
3,465
2011
Oct
3,465
2012
Mar
4,037
2012
Oct
4,612
2013
July
5,722
2014
Oct
6,975
2015
Oct
6,975
6,893
6,922
6,973
7,540
8,112
9,258
10,355
12,675
12,675
9,720
9,751
9,811
10,381
10,953
12,100
12,100
14,660
14,660
11,988
12,030
12,108
13,243
13,815
14,963
16,610
21,610
23,750
14,360
14,400
15,000
16,400
17,100
18,500
20,000
25,100
27,240
25
The revenue collected from excise duty on

motor vehicles recorded a sharp increase
of 143.9 percent to Rs. 171 billion in the
first nine months of 2015, compared to Rs.
70 billion recorded in the same period of
2014 benefiting from consolidation of
other taxes on motor vehicles with excise
(Special Provisions) duty and increased
motor vehicles imports. The number of
motor vehicles imported in January to
September 2015 increased by 55 percent,

compared to same period of 2014
emanating from the increase imports of
motor bicycles and motor cars less than
1000cc. Also, the revenue from petroleum
products increased by 372 percent to Rs.
22 billion in first nine months of 2015,
compared to Rs. 4.7 billion in the review
period of 2014.
Table 10 : Motor Vehicle Imports and New Registration of Vehicles

Item
2014
Buses
Motor Cars
Three Wheelers
Motor Cycles
Goods Transport
Vehicles(a)
Land Vehicles (b)
Other
Total
1,938
24,746
60,035
208,980
Imports
Jan. - Sep.
2015
Change
3,728
1,790
83,211
58,465
100,612
40,577
259,943
50,963
%
92
236
68
24
(Unit: Number)
New Registrations
Jan. - Sep.
2014
2015 Change
%
2,031
3,264
1,233
61
24,982
74,966
49,984 200
57,202
96,987
39,785
70
160,890 273,691
112,801
70
17,453
34,937
17,484
100
17,870
33,938
16,068
90
3,219
280
316,651
9,167
392
491,990
5,948
112
175,339
185
40
55
5,978
597
269,550
7,823
963
491,632
1,845
366
222,082
31
61
82
Sources: Department of Customs and Department of Motor Traffic

(a) Lorries and other goods transport vehicles including dual purpose vehicles
(b) Tractors, hand tractors and other land vehicles.
Import Duty
The revenue from import duty increased
by 23.5 percent to Rs. 73.5 billion during
the first nine months of 2015, compared to
Rs. 59.5 billion recorded in the same
period of 2014. This improvement was
mainly supported by the significant
growth in imports of consumer and
investment goods during the reference
period. In particular, 117 percent increase
in imports of transport equipment and 8.3
percent increase in machinery and
equipment coming under investment
goods category and 36.4 percent increase
in non-food consumables other than
vehicles, were mainly contributed to
enhance the revenue in the review period.
Furthermore, the policy measures taken to

impose custom duty on importation of
liquor in lieu of VAT and NBT supported
this performance. This performance was
recorded amidst the importation of
products coming under the South Asian
Free Trade Agreement (SAFTA), Asian
Free Trade Agreement (AFTA) and Free
Trade Agreements entered into various
countries, such as India and Pakistan and
also the import duty exempted items
under the list of exemptions and
concessions of the Revenue Protection
Order such as fertilizer, pharmaceutical
manufacturing items and machinery and
equipment used for supply and
distribution of electricity and duty
exempted items under investment
agreements.
26
Table 11 : Coverage of Product and Value of Imports Under Free Trade Agreements
Free Trade Agreement
India - Sri Lanka Free Trade Agreement (ISFTA)
Jan. - Sep. 2015

No. of Products Subject
Imports
to Tariff Concessions
(Rs. Million)
4,666
27,758
Pakistan - Sri Lanka Free Trade Agreement (PSFTA)
5,501
3,336
South Asia Free Trade Agreement (SAFTA)
5,233
487
565
1,541
15,965
33,122
Asia - Pacific Trade Agreement (APTA)

Total
Sources: Department of Customs and Department of Trade and Investment Policy
Special Commodity Levy (SCL)

Special Commodity Levy (SCL), which is
a single composite tax covering 36
commodities, recorded an increase of 2.2
percent to Rs. 37.7 billion for the first nine
months of 2015, compared to the same
period of 2014. This performance was
mainly led by the periodical revisions of
SCL rates, provision of necessary
protection for domestic agricultural
producers while reducing volatility in
commodity prices in the domestic market.
The reduction of applicable SCL rates in
the Interim Budget on 10 essential
commodities, namely sugar, green gram,
sprats, canned fish, coriander, black gram,

Maldive fish, turmeric and chilies with
effect from 30 January 2015 and removal
of rice from SCL basket led to slow down
SCL revenue in the review period. The
key revenue items during the period
concerned included potatoes, sugar,
Bonions and canned fish. However, the
revenue from sprats, sugar, dried fish,
Maldive fish, butter and turmeric
recorded a decline during the first nine
months of 2015, in comparison to the
corresponding period of 2014.
27
Table 12 : Special Commodity Levy Rates

(Rs. Per Kg.)
End September
2014
Item
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
Sprats
Potatoes
Red Onions
B' Onions
Garlic
Green Gram
Lentils - Whole
Lentils - Split
Chilies - Neither Crushed nor ground
Chilies - Crushed or ground
Canned fish
Sugar
Watana - Whole
Watana - Split
Chick Peas - Whole
Chick Peas - Split
Black Gram
Cowpea
Millet
Maldives Fish
Dried Fish
Orange-Fresh
Grapes - Fresh
Apples - Fresh
Seeds of Coriander - Neither Crushed nor Ground
Seeds of Coriander - Crushed or Ground
Seeds of Cumin
Seeds of Fennel
Turmeric - Neither crush Nor Ground
Turmeric - Other
Mathe - Seed
Kurakkan (Eleusine Coracana Spp.)
Kurakkan (Eleusine Coracana Spp.) Powder
Black Gram Flour
Ground Nut - Shelled
Mustard Seeds
Palm oil - Crude
Palm oil - Refine
Palm Kernel - Crude
Palm Kernel - Refine
Fish
Mackerel
Yoghurt
Butter
Margarine(Fat 80% or more)
Margarine - Other
35
Salt
36
Rice
37
Maize / Sorghum
Compiled by the Department of Trade and Investment Policy
* SCL for rice removed with effect from 06.05.2015
32
33
34
26
40
5
35
40
70
2
5
25
150
102
33
15
18
7
10
110
70
70
302
102
65
130
45
46
202
162
52
202
510
50
70
150
300
112
62
90
110
110
125
10% or Rs.10 per
Kg
10
625
880
175
275
40
1
10% per Kg
End September 2015

11
40
5
10
40
10
2
0.25
25
125
50
30
15
18
7
10
60
70
70
102
102
65
130
45
26
52
162
52
102
360
50
70
150
200
112
62
110
130
130
145
10% or Rs.10 per Kg
6
625
880
175
275
40
*
10% per Kg
28

Total revenue from NBT amounted to Rs.
30.6 billion during the first nine months of
2015, a decrease of 1.8 percent, in
comparison to Rs. 31.1 billion during the
same period of 2014. This decline was
mainly attributed to policy measures
taken to abolish NBT and several other
taxes applicable for the importation of
motor vehicles and importation and
manufacturing of liquor and tobacco as a
measure of consolidation of the tax
structure
coupled
with
increased
threshold of liable turnover to Rs. 3.75
million per quarter from Rs. 3.0 million
per quarter.
The revenue collected form NBT on

domestic activities declined by 1.2 percent
to Rs. 19.2 billion in the first nine months
of 2015 from Rs. 19.5 billion in the same
period of 2014. However, manufacturing
products, retail trade, distribution, rent
income, food and pastry shop, bakery
products (bread, cakes, biscuits, noodles),
construction and concrete works were
contributed
positively
to
this
performance.
During the first nine months of 2015, Rs.
15.3 billion was transferred to Provincial
Councils (PCs) as NBT collection under
the
revenue
sharing
mechanism
introduced in 2011.
Table 13 : Performance of NBT, Stamp Duty and Motor Vehicle Registration Fees
(Rs. Million)
2014
Item
NBT*
Domestic
Import
Stamp Duty**
Motor Vehicle
Registration Fees***
Total
% Change
2015/2014
Jan. - Sep.
2015 (a)
Jan. - Sep.
Jan. - Sep.
CG
PCs
Total
CG
PCs
Total
CG
PCs
Total
31,155
19,480
11,675
517
15,578
9,740
5,838
5,988
1,207
46,733
29,220
17,513
5,988
1,724
30,579
19,250
11,329
930
15,290
9,625
5,665
8,410
2,170
45,869
28,875
16,994
8,410
3,100
-1.8
-1.2
-3.0
79.9
-1.9
-1.2
-3.0
40.4
79.8
-1.8
-1.2
-3.0
40.4
79.8
31,672
22,773
54,445
31,509
25,870
57,379
-0.5
13.6
5.4

(a) Provisional
* Since 2011, 33 1/3 percent of the revenue collected from the NBT by the Central Government (CG) has been transferred to
Provincial Councils (PCs).
**Since 2011, 100 percent of the revenue collected from the stamp duty by the CG has been transferred to PCs.
***Data represent 70 percent of the revenue collected by the CG from motor vehicles registration fee and transferred to PCs.
Key: CG= Central Government; PCs= Provincial Councils
Telecommunication Levy (TL)

TL was introduced by Telecommunication
Levy Act, No. 11 of 2011in lieu of different
indirect taxes charged on the industry,
such as VAT and NBT. Revenue collected
from the TL declined by 2.6 percent to Rs.
24.0 billion in the first nine months of
2015, in comparison to Rs. 23.4 billion
recorded in the same period of 2014. The
benefits time given to prepaid users was
the main reason for this marginal decrease
in revenue. The VAT exemptions
provided for the importation of

machinery and high-tech equipment since
2011 helped acquire latest technology and
also expansion in the sector.
Cess Levy
Cess Levy was introduced as a protective
instrument for encouraging local value
addition in export industry while
discouraging importation of non-essential
commodities into the country. On
cumulative basis, the Cess revenue
29
collected from January to September 2015

billion, compared to Rs. 27.5 billion in the
corresponding period of 2014. The
revenue from import Cess imposed under
Sri Lanka Export Development Act,
billion in the first nine months of 2015,
compared to Rs. 25.4 billion recorded in
the same period of 2014. Upward revision
of Cess rates of items, such as liquor,
rubber, paper and paper board was
mainly contributed to improvement in
import Cess revenue. However, removal
of Cess for certain items specified under

Chapter 87 of the Customs Tariff Guide
was adversely affected to the Cess
revenue. The imports of Portland cement,
tiles, fabrics, textiles and steel were
among the highest import Cess generated
items in the reference period. Meanwhile,
the revenue from export Cess for selected
goods in primary form declined by 5.4
percent to Rs.2.0 billion, in comparison to
first nine months of 2014. This was mainly
backed by significant drop in both export
volume and prices of tea and the decrease
in mineral exports.
Table 14 : Cess Revenue from International Trade

(Rs. Million)
Jan. - Sep.
Item
Cess on Exports
Tea-under Tea (Tax and Control of Export) Act, Sri Lanka Tea
Board Law
Rubber-under Rubber Replanting Subsidy Act
Coconut-under Coconut Development Act
EDB Cess- under Sri Lanka Export Development Act
Cess on Imports- under Sri Lanka Export Development Act
Total
2014
2015 (a )
2,111
1,997
578
465
30
10
104
100
1,399
1,422
25,373
27,485
29,713
31,709

(a) Provisional
Ports and Airports Development Levy

(PAL)
grain, cement and mobile telephones

increased in the reference period.
The revenue generated from PAL

decreased by 17.3 percent to Rs. 38.9
billion in the first nine months of 2015, in
comparison to Rs. 47.1 billion in the same
period of previous year. This decline was
mainly due to the introduction of a
composite tax in place of other taxes.
Despite the fact that revenue generated
from PAL declined in the reference
period, tax revenue from the imports of
gas, diesel, petrol, milk and cream, wheat
Non-Tax Revenue
Total non-tax revenue during the first
nine months of 2015 decreased by 7.1
percent to Rs. 70.6 billion, compared to Rs.
76.0 billion recorded in the same period of
2014. The non-tax revenue of profits and
dividends from SOBEs increased by 7.3
percent while sales and charges increased
by 33.8 percent.
30
Table 15: Variance Analysis of Government Revenue (January September)(Rs. Billion)

Item
2014
2015
Prov.
Income Tax
155.8
154.3
Revenue from PAYE tax increased by 16.3 percent due to the

increase in the wages and salaries, the high compliance, tax rate
reduction for upper limit to 16 percent and the increased tax free
allowance up to Rs. 750,000. The tax revenue from WHT on interest
income decreased by 22.9 percent due to limited issuance of
government securities. Continuous increased in domestic economic
activities, such as commercial banking, financial and insurance,
export trade, manufacturing products and alcoholic beverages
sectors contributed to the increase in the corporate and noncorporate tax revenue.
VAT
200.4
162.2
A policy decision taken to abolish VAT on the importation of motor

vehicles and import and manufacturing of liquor, tobacco and
cigarettes from VAT as a measure to simplify the tax system were
negatively affected to VAT revenue. The rate reduction to 11 percent
from 12 percent and the increase VAT registration threshold to Rs. 15
million were also attributed to this revenue decrease. In contrast,
improved performance in sectors such as commercial banking,
financial and insurance and tourism made a positive impact on the
revenue.
Excise Tax
164.9
329.2
This significant achievement was mainly due to the policy change to

simplify the tax system by introducing Excise (Special Provisions)
Duty for the import of motor vehicles in lieu of VAT, NBT, Cess,
Custom Duty and PAL. The revenue from excise tax on motor
vehicles recorded a 143.9 percent growth supported by the higher
demand for hybrid motor vehicles and the small motor cars due to
duty reduction. Introduction of the Excise (Special Provisions) duty
for the importation or manufacturing of cigarettes in lieu of VAT and
NBT was also attributed for this increase.
Import Duty
59.5
73.5
Port and Airport

Development
Levy (PAL)
Nation Building
Tax (NBT)
47.1
38.9
This increase was mainly due to the policy change made to impose
Custom Duty on importation of liquor in place of VAT and NBT. The
increase in overall imports, particularly consumer goods such as
cereals, manufacturing goods, such as rubber, chemical products,
textiles and textile articles were positively contributed to this growth.
The policy decision taken to abolish PAL from the importation of
motor vehicles was the main reason for this decline.
31.2
30.6
Policy measures taken to abolish NBT on the importation of motor

vehicles as well as importation and manufacturing of tobacco,
cigarettes and liquor from NBT, increasing NBT threshold to Rs. 15
million contributed this marginal decline. However, growth in
wholesale and retail sector, manufacturing activities, sale of food
items, and banking and financial services made a positive impact on
the revenue.
Other Taxes
93.3
99.5
Increased Cess rate on liquor helped expand the Cess revenue. The
revision of the SCL rates helped increase the revenue from SCL
whereas revenue from Telecommunication Levy decreased mainly
due to the bonus talk time given to prepaid customers during last
three months.
Non-tax Revenue
76.0
70.7
Due to the performances of the SOBEs, non-tax revenue by way of

profits and dividends increased by 7.3 percent while that from sales
and charges increased by 33.8 percent.
828.2
958.9
Total
Reason
Compiled by the Department of Fiscal Policy
31
1.3 Government Expenditure

The government expenditure in the first
nine months of 2015 amounted to Rs.
1,532.5 billion comprising Rs. 1,213.1
billion of recurrent expenditure and Rs.
319 billion of capital expenditure. The

recurrent expenditure increased by 26.1
percent whereas capital expenditure
declined by 12.4 percent in the review
period.
Table 16: Performance of Government Expenditure

Item
(Rs .Million)
Jan. - Sep.
2014
2015 (a)
962,076
1,213,087
Salaries
305,594
447,320
Pension
92,043
114,709
Interest
363,489
426,550
Other
200,950
224,508
Capital Expenditure
Total
364,618
319,457
1,326,697
1,532,544
Source : Department of National Budget

(a) Provisional
Personnel Emoluments and Pension

Personnel emoluments for public servants
including those attached to the Provincial
Councils (PCS) and Public Institutions
increased by 46 percent to Rs. 447.3 billion
in the first nine months of 2015.This
increase was mainly due to the increase of
monthly cost of living allowances (COLA)
provision of all public servants coupled
with the expansion of the recruitments.
Around 19,000 employees who had been
working on temporary, casual (on daily
wages), substitute and contract basis in
the public sector with a continuous and
satisfactory service of 180 days, have been
absorbed to the permanent cadre with
effect from January, 2015. However, the
full impact of the payment of a monthly
interim allowance of Rs. 10,000 and
payment of professional allowance for
executive staff (between 3,000 - Rs.15,000 )
was reflected on the expenditure since
June 2015.
Total pension payments amounted to Rs.

114.7 billion during the first nine months
of 2015, in comparison to Rs. 92.0 billion
in the same period in 2014 due to the
payment of monthly interim allowance for
pensioners of Rs. 2,500 from January and
Rs.1,000 from April 2015. Furthermore, on
the basis of the public sector salary
structure implemented on 01.01.2006, the
adjustment of pensions which was made
with
effect
from
01.07.2015
has
significantly contributed to the increased
pension expenditure.
Interest Payments
Interest payments on domestic and
foreign debt in the first nine months of
2015 amounted to Rs. 426 billion, a 17.3
percent increase over the corresponding
period of 2014.
32
Table 17 : Behavior of Yield Rates on Government Securities and Exchange Rate: 2014-2015
Treasury Bills (%)
Period
91 days
2014
2015
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
6.82
6.72
6.65
6.58
6.56
6.51
6.43
6.19
6.15
6.15
6.15
5.74
5.80
5.98
6.60
6.19
6.10
6.08
6.28
6.53
6.78
6.61
182
days
7.00
6.89
6.82
6.79
6.75
6.69
6.54
6.28
6.23
6.23
5.84
5.84
5.90
6.09
6.70
6.35
6.22
6.18
6.43
6.87
7.07
6.99
Treasury Bonds (%)

364
days
7.14
7.07
7.05
7.02
7.02
6.99
6.68
6.30
5.89
6.00
6.00
6.00
6.05
6.13
6.80
6.50
6.31
6.28
6.48
6.97
7.18
7.06
2 year
3 year
4 year
5 year
8.14
6.70
-
8.70
8.15
7.96
7.18
8.18
-
8.92
8.15
8.19
9.50
8.65
8.90
9.13
9.07
8.46
8.11
8.39
8.38
9.58
-
Average
Exchange
Rate
Rs/US$
130.72
130.82
130.62
130.62
130.45
130.33
130.24
130.19
130.26
130.60
130.94
131.02
131.55
132.73
132.90
132.90
133.50
133.90
133.69
133.88
138.88
140.89
Sources: Department of Treasury Operations, Department of Public Debt and Central Bank of Sri Lanka
Welfare Expenditure
The expenditure on welfare programmes
continued targeting the vulnerable groups
and the needy segment of the society
incurring by Rs. 113.2 billion during the
first nine months of 2015, compared to Rs.
94.0 billion for the same period of 2014.
The increase of Samurdhi relief by 200
percent, elders allowances to Rs. 2,000
from Rs.1,000 and Poshana Malla also
contributed
expand
the
welfare
expenditure.
Within this total expenditure, a significant
amount of Rs. 55.8 billion was spent for
Samurdhi relief, elderly and differentlyabled soldiers, parents of security
personnel,
differently-abled
persons,
Kidney patients, and flood and drought
affected families. It was a 91 percent
increase over Rs. 29.3 billion recorded in a
same period of 2014. In addition, the

expenditure on service compensation for
the dead and differently-abled soldiers
was Rs.17.2 billion during the first nine
months of 2015, a 33.2 percent increase
over the same period of 2014.
Rs. 3.6 billion was spent for the Poshana
Malla, Thriposha programme, fresh milk
and school nutritional
programmes
during the review period to improve
nutritional status of mothers and children.
The priority was given to continue free
medicine for all incurring Rs.21.4 billion
during the first nine months of 2015.
Furthermore, free text books, uniforms,
season tickets, bursaries, free Dhama
school text books, mahapola scholarships,
uniforms and library books allowance
were provided at a cost of Rs .4.9 billion
during the period concerned.
33
Table 18 : Welfare Expenditure

(Rs. Million)
Jan.- Sep.
Item
2014
2015 (a)
Healthcare & Nutrition
27,045
24,096
Free Medicine for All
25,402
21,377
1,365
1,320
Fresh Milk for Free School Children
112
101
Poshana Malla
278
1,298
7,876
5,829
Free Text Books
1,961
2,283
Free School Uniforms
1,956
80
School Season Tickets
1,695
1,800
School Nutritional Foods
1,473
890
87
241
Bursaries
285
252
Dhamma School Text Books
101
50
Dhamma School Uniforms for Teachers
161
59
Library Allowances for Dhamma School Teachers
157
174
Livelihood Support
35,739
52,441
Fertilizer Subsidy
18,438
6,766
Samurdhi Relief
11,359
30,100
7,201
Credit Subsidies for Replanting (Tea /rubber )
784
737
Credit Subsidies Export Crops
166
168
4,992
7,469
23,304
30,855
354
805
1,975
5,810
12,944
17,238
2,530
1,729
108
157
4,770
4,975
623
141
93,964
113,221
Thriposha Programme
Education
Mahapola Scholarships
Subsidies for Guaranteed Price for Tea & Rubber
Increase of Price & Paddy Purchasing

Social Welfare & Safety Net
Assistance for Differently-abled Persons & Kidney Patients
Assistance to Elderly Persons
Assistance to Differently-abled Soldiers
Social Care of Ranawiru Parents
Food Assistance as Flood and Drought Relief
Bus Services in Uneconomical Roots
World Food Programme
Total
Source: Department of National Budget
34
The fertilizer subsidy programme also

continued with a cost of over Rs. 6.8
billion to provide all varieties of fertilizer
for paddy farmers and other small crops
holders. Furthermore, price subsidy
programmes have been introduced for
paddy, tea and rubber in 2015 of which,
Rs. 7.5 billion incurred for paddy
purchasing and Rs. 7.2 billion for
guaranteed price for tea and rubber. In
addition, Rs. 0.7 billion was spent on
outlays for cultivation subsidy for tea and
other export crops during this period.
Public Investment
The outlays on public investment
continued during the first nine months of
2015 reflecting governments commitment
towards infrastructure development drive
covering the areas of education, health,
roads, highways, water supply and
sanitation, power and energy and
irrigation and water management. The
total public investment was Rs. 311.4
2015, a decline of 17.1 percent compared
to Rs. 375.9 billion in 2014.
35
2. TREASURY OPERATIONS
2.1 Performance of the Government
Treasury Cash Flow
Cash inflows to the General Treasury
during the first nine months of 2015
increased by 20 percent, compared to the
same period in 2014. Net cash deficit after
outflows for recurrent and capital
payments amounted to Rs. 597.6 billion
which was lower than Rs. 39.1 billion
recorded in the corresponding period of

2014. This was mainly due to the increase
of revenue by 20 percent and decrease in
cash outflows for capital payments by 23
percent, compared to the corresponding
period of the previous year. The overall
closing cash balance (deficit) as at end
September, 2015 was Rs. 176.0 billion
which was lower than the cash deficit
which prevailed at the end of September
2014, by Rs. 2.6 billion.
Table 19: Statement on Government Treasury Cash Flow Operations

(Rs. Billion)
Item
Opening Cash Balance as at 1st January
Total Cash Inflow from Revenue and Other
Receipts
Total Cash Outflow for Recurrent Payments
Total Cash Outflow for Capital Payments*
Net Cash Surplus / (Deficit)
Gross Borrowing *
Debt Repayment
Net Borrowing
Adjustment Account Balance (TEB, Net
Deposits, etc.)
Closing Cash Balance as at 30thSeptember
2014
Jan. Sep.
Actual
-165.7
2015
Jan. Sep.
Estimate
-180.7
Actual
-180.7
769.1
967.3
922.5
-999.0
-406.8
-636.7
1,203.0
-567.8
635.2
-1,263.2
-502.8
-798.7
1,369.3
-730.9
638.4
-1,206.3
-313.8
-597.6
1,302.6
-712.2
590.4
-11.4
2.7
11.9
-178.6
-338.3
-176.0
Source: Department of Treasury Operations *Includes project/programme loans received by the government and
recorded in the CS-DRMS as at July 30,2015
2.2 Management of Government Debt

Government debt operations indicated
total gross borrowing as Rs. 1,302.6 billion
during the first nine months of 2015. Out
of the total, Rs. 1,102.2 billion was
domestic borrowings and the balance was
foreign borrowings. The repayments of
government debt both domestic and

foreign amounted to Rs. 712.2 billion
while the net borrowing was Rs. 590.4
billion during this period. Table 20
summarizes government gross domestic
borrowings during January - September,
2015.
36
Chart 5 : Gross Domestic Borrowings by Instrument

Jan. - Sep. 2015
Treasury
Bonds
64%
CBSL
Provisional
Advances
1%
Sri Lanka
Development
Bonds
26%
Treasury
Bills
9%
Table 20 : Gross Domestic Borrowings by Instruments

Instruments
(Rs. Billion)
Jan. -Sep. 2015
Treasury Bonds
707.7
Treasury Bills
97.5
Sri Lanka Development Bonds
288.0
CBSL Provisional Advances
9.0
Total
1,102.2
Source: Department of Treasury Operations
2.3 Disclosure of Contingent Liabilities

on Treasury Guarantees
The value of Treasury Guarantees issued
and remaining valid as at September 30,
2015 was Rs. 605.6 billion which is within
the limit of 7 percent of GDP as per the

Section 2(a) of the Fiscal Management
(Responsibility) (Amendment) Act, No. 3
of 2003. The list of Treasury Guarantees
issued by the General Treasury as at
September 30th, 2015 is given in Annex II.
37
3. FOREIGN FINANCING
3.1 Foreign Financing Commitments
(January to September, 2015)
The total commitments made by the
development partners and lending
agencies to Sri Lanka to support the
public investment program during
January to September 2015 was US$ 641.7

million of which project loans amounted
to US$ 637.2 million and grant was US$
4.5 million. Table 21 shows a details of the
Agreements signed during the first nine
months of 2015.
Table 21: Foreign Financing Agreements Signed During (January September 2015)
Development
Partner/ Lending
Agency
Loan
Agreement
Date
Project
Food and
Agriculture
Organization (FAO)
Grant
25/02/2015
Agro Economic
Development
Project
Government of
Korea
Loan
22/05/2015
Hatton-Nuwara
Eliya
Improvement
Project
KRW
19,166.0
2,317.2
17.3
Asian Development
Bank (ADB)
Loan
28/05/2015
Integrated Road
Investment
Program
XDR
6.1
1,148.2
8.6
Asian Development
Bank (ADB)
Loan
28/05/2015
Integrated Road
Investment
Program
USD
98.0
13,122.2
98.0
Australia and New

Zeeland Bank in
Australia
Enhancement(Lo
an)
29/05/2015
Integrated
Water Supply
Scheme for the
Un-served Areas
of Ampara
District
USD
7.5
1,004.0
7.5
Government of
Sweden
Enhancement(Lo
an)
03/06/2015
Ratmalana &Jaela Wastewater

Treatment
Facilities Project
USD
3.1
415.0
3.1
OPEC fund for

International
Development
Loan
26/06/2015
Western
Province Road
development
Project
USD
17.0
2,273.1
17.0
OPEC fund for

International
Development
Loan
26/06/2015
Badulla
Chenkaladi
Road
Development
Project
USD
60.0
8,022.7
60.0
/Grant
Amount Committed
In Signed
Currency
CAD
Amount
Million
3.0
SL Rs. Mn
320.0
US$
Mn.
2.4
38
Government of
Japan
Loan
11/08/2015
National
Transmission
and Distribution
Network
Development
and Efficiency
Improvement
Project
JPY
23,900.0
26,729.9
199.9
Government of
Japan
Enhancement(Gr
ant)
14/08/2015
Amendment to
the Grant
Agreement for
Rehabilitation of
Killinochchi
Water Supply
Project
JPY
248.0
277.4
2.1
HSBC (With a
Guarantee of EKF
Denmark)
Loan
14/08/2015
Establishment of
Dairy
Processing Plant
at Badalgama-
EUR
66.6
9,932.7
74.2
Asian Development
Bank (ADB)
Loan
17/09/2015
Mahaweli Water
Security
Investment
Programme Tranche 1
XDR
53.6
10,624.1
75.6
Asian Development
Bank (ADB)
Loan
17/09/2015
Mahaweli Water
Security
Investment
Programme (Tranche 1)
USD
76.0
10,688.3
76.0
Total
86,874.8
641.7
Source: Department of External Resources

Note : The conversion rates used for this report were the exchange rates prevailed for different currencies at the date where the
disbursement was made.
3.2 Foreign Financing Disbursements

(January to September, 2015)
The
total
disbursements
from
commitments already made by various
bilateral and multilateral development
partners during January to September of
2015 was US$ 938.4 million (LKR 125,616
million), of which project loans accounted
to US$ 914.1 million, 97.4 percent of total
disbursement, and grant amounted to US$
24.4 million.
Table 22 shows disbursements made
during the period by each development
partners. Out of total disbursements

recorded during the first nine months of
2015, 63.7 percent or US$ 597.7million was
financed by the bilateral development
partners and 36.3 percent or US$ 340.7
million was made by multilateral
development partners. The highest
amount of disbursement (US$ 208.7
million) was made for the projects funded
by China followed by ADB, World Bank
and Japan by disbursing US$ 160.3
million, US$ 134.5 million and US$ 131.6
million, respectively.
39
Chart 6 : Foreign Finance Disbursements by

Development Partners - Jan.-Sep. 2015
India
8%
ADB
17%
China
21%
WB
14%
Netherlands
6%
UK
5%
Japan
14%
Other
14%
Around 29.5 percent of the total

disbursements
during
January
to
September in 2015 was mobilized for the
roads and bridges and ground transport
sector. Disbursements for the projects
under water supply and sanitation, health

and social welfare and power and energy
amounted to around 10.7 percent, 8
percent and 7.8 percent, respectively.
Chart 7 : Disbursements by Sector -Jan -Sep 2015

35
30
US$ Mn.
25
20
15
10
5
0
Roads and
Bridges
Water Supply
& Sanitation
Defence
Power &
Energy
other
40
Table 22: Foreign Finance Disbursement by Development Partner

(Millions)
Jan. Sep. 2015
Development Partner/ Lending Agency
Loan
Grant
Total Amount
Rs.
US$
Rs.
US$
Rs.
US$
Bilateral
79,330.5
592.6
682.5
5.2
80,013.1
597.7
China
27,969.3
208.7
27,969.3
208.7
Japan
17,181.0
128.4
422.3
3.2
17,603.3
131.6
India
9,544.9
71.4
9,544.9
71.4
United Kingdom
5,602.6
41.9
5,602.6
41.9
Netherlands
7,778.8
58.3
7,778.8
58.3
South Korea
2,081.8
15.6
2,081.8
15.6
Hungry
660.3
4.9
660.3
4.9
Sweden
285.5
2.1
285.5
2.1
1,300.4
9.8
1,300.4
9.8
France
909.7
6.6
909.7
6.6
Austria
687.2
5.1
687.2
5.1
1,119.5
8.4
1,119.5
8.4
190.0
1.4
260.2
2.0
450.3
3.4
1,060.2
7.6
1,060.2
7.6
950.7
7.1
950.7
7.1
2,008.7
15.0
2,008.7
15.0
43,059.0
321.5
2,544.1
19.2
45,603.1
340.7
Asian Development Bank
21,276.0
158.7
206.5
1.6
21,482.5
160.3
World Bank - International

Development Association
World Bank - International Bank for
Reconstruction and Development
International Fund for Agricultural
Development
UNDP
13,345.5
99.4
2,092.7
15.8
15,438.2
115.2
2,496.7
18.8
70.4
0.5
2,567.1
19.3
459.5
3.5
66.9
0.5
526.4
4.0
20.4
0.2
20.4
0.2
UNFPA
4.5
4.5
UNICEF
82.7
0.6
82.7
0.6
1,535.2
11.5
1,535.2
11.5
3,946.1
29.5
3,946.1
29.5
122,389.5
914.1
3,226.6
24.4
125,616.1
938.4
Spain
Belgium
Germany
Kuwait
USA
Saudi Fund
Multilateral
OPEC Fund for International

Development (OFID)
European Investment Bank
Total
Source Department of External Resources

Note 1. The conversion rates used for the report were the exchange rates prevailed for different currencies at the
date where the disbursement was made
2. Disbursements made from foreign loans obtained by SOBEs are not included..
41
3.3 Committed Undisbursed Balance

(CUB) and Utilization
The total undisbursed balance for foreign
financing available for development
projects as at 30.09.2015 was US$ 7,671.2
million, of which US$ 5,320.3 million or 69
percent of total undisbursed balance was
available for economic infrastructure

sector, which includes balance available
for road and bridges, power and energy
and water supply and sewerage sectors
amounting to US$ 3,176.4 million, US$
868.6 million and US$ 794.5 million,
respectively. The sector-wise classification
of the committed undisbursed balance is
demonstrated in Table 23.
Table 23 : Sector-wise Commitment Undisbursed Balance as at end September 2015

Economic Sector
Agriculture
Agriculture
Livestock Development
Land & Irrigation
Economic Infrastructure
Transport
Ports & Shipping
Power & Energy
Water Supply and Sewerage
Road and Bridges
Social Infrastructure
Education & Vocational Training
Health & Social Welfare
Housing & Urban Development
Rehabilitation
Regional & Rural Development
Finance & Banking
Institutional & Industrial Development
Environment
Other
Total
Rs.
91,740.9
3,289.7
12,036.5
76,414.7
751,415.6
51,367.4
16,543.0
122,677.9
112,206.5
448,620.8
103,960.1
41,332.9
23,503.1
37,465.4
1,658.7
409.1
1,772.5
3,409.7
8,874.7
121,849.8
1,083,432.4
(Million)
US$
649.6
23.3
85.2
541.1
5,320.3
363.7
117.1
868.6
794.5
3,176.4
736.1
292.7
166.4
265.3
11.7
2.9
12.5
24.1
62.8
862.8
7,671.2
Source: Department of External Resources

Note: Foreign loans commitments received by SOEs are not included
42
Chart 8 : Committed Undisbursed Balance by Development
Partners as at end September 2015

China
32%
India
4%
Russia 2%
Japan
17%
Korea
1%
Asian
Development
Bank
16%
other
12%
UN Agencies
1%
World Bank
10%
Iran
5%
3.4 Outstanding External Debt and Debt

Service Payments
By the end of September 2015, the total
outstanding external debt of the
government was US$ 20.73 billion2. The
total debt service payments3 from January
to September 2015 amounted to US$
1,575.9 million, of which US$ 1,123.9
million was for principal payments and

the balance, US$ 452.0 million was for
interest payments. Total estimated debt
service payments for 2015 amounted to
US$ 1,832.4 million4, of which 86.0 percent
has already been made by 30th September
2015.
This includes outstanding external debt for loans

obtained to finance development projects and
International Bond Issuances. Loans obtained by
State Owned Enterprises (SOEs) and foreign
investment on Treasury bond and Treasury Bills
are not included.
3
Debt service = Principal Payments + Interest
Payments.
Including the Debt Service Payments of

International Bond Issues.US $ estimations are
based on the exchange rates as at 30th September
2015.
43
4. PERFORMANCE OF STATE OWNED BUSINESS ENTERPRISES

4.1 Overview
During the first eight months of 2015, 19
SOBEs contributed towards governments
nontax revenue by way of paying
dividends and levies to the Consolidated

Fund totaling Rs. 20.3 billion. Profitability
of these SOBEs recorded Rs .42.7 billion
for the first eight months of 2015.
Table 24: Profitability of 55 State Owned Business Enterprises (SOBEs) as at 31.08.2015

(Rs. Million)
Profit Before Tax
Enterprises
2013
2014
01/01/2015 to
31/08/2015 *
2015 Estimate
Bank of Ceylon
15,258
20,777
12,224
24,150
Peoples Bank
10,304
17,200
11,725
18,530
2,279
10,472
8,329
11,037
State Mortgage & Investment Bank

Housing Development Finance Corporation
Lankaputhra Development Bank
343
309
371
411
818
193
494
518
82
492
829
163
Regional Development Bank
689
1,268
592
2,029
Sri Lanka Savings Bank
616
236
196
354
National Savings Bank
Employment Trust Fund Board
15,167
17,274
11,476
16,869
Sri Lanka Insurance Corporation
5,012
3,257
1,679
5,326
National Insurance Trust Fund
4,374
4,674
1,600
2,854
207
190
165
246
Agriculture & Agrarian Insurance Board
-1,887
-1,941
-1,759
-3,000
Ceylon Electricity Board
18,636
-15,628
14,625
6,810
Ceylon Petroleum Corporation
-7,770
1,633
-4,912
-4,544
1,625
1,193
4,746
7,950
1,432
5,496
5,651
48
3,115
5,646
-1,246
3,572
-32,358
-16,433
-6,488
-12,649
Mihin Lanka Ltd
-2,550
-1,187
-667
-869
Sri Lanka Transport Board

State Engineering Corporation of Sri Lanka
Central Engineering Consultancy Bureau
State Development and Construction
Corporation
Milco (Pvt) Ltd
-3,496
149
585
-1,865
-173
736
-8,601
-452
205
2,658
-515
280
90
90
40
93
160
185
23
106
87
111
27
Sri Lanka State Plantation Corporation
-228
-69
-92
-140
Janatha Estate Development Board
-248
-237
-129
-98
208
227
111
216
Sri Lanka Export Credit Insurance

Corporation
Sri Lanka Ports Authority

National Water Supply & Drainage Board
Airport & Aviation Services Ltd
Sri Lankan Airlines Ltd
National Livestock Development Board
Kurunegala Plantations Ltd
44
Chilaw Plantations Ltd
82
85
103
138
Kalubovitiyana Tea Factory Ltd
28
24
17
75
Sri Lanka Cashew Corporation
Lanka Mineral Sands Ltd
30
328
220
545
172
118
70
102
21
-13
10
1,979
2,345
1,566
2,266
National Lotteries Board
477
582
228
173
State Pharmaceuticals Manufacturing

Corporation
328
270
255
207
42
47
265
406
777
654
533
1,451
Sri Jayewardenepura General hospital
92
549
70
138
Independence Television Network Ltd
847
566
339
510
Lanka Phosphate Ltd *

Kahatagaha Graphite Lanka Ltd *
Development Lotteries Board
Sri Lanka Ayurvedic Drugs Corporation

State Pharmaceuticals Corporation
Sri Lanka Rupavahini Corporation

Sri Lanka Broadcasting Corporation
Sri Lanka Handicraft Board
State Timber Corporation
STC General Trading Company
Lanka Sathosa Ltd
State Printing Corporation
48
-182
-287
32
-130
-51
83
24
21
40
382
425
195
453
78
46
-24
663
364
-1,113
NA
78
71
97
Ceylon Fisheries Corporation
-80
-56
-50
Ceylon Fishery Harbour Corporation
-42
20
-70
30
Ceylon Fertilizer Company Ltd
127
178
93
408
Colombo Commercial Fertilizer Company

Ltd
123
113
131
357
Hotel Developers Lanka Ltd.

Lanka Sugar Company (Pvt.) Ltd
Total
253
316
54
108
1,346
-108
-1,069
-1,262
41,532
63,788
51,539
85,522
*Provisional
NA Not Available
Sources: SOBEs, Department of Public Enterprises
4.2 Performance of Key SOBEs

Energy
Ceylon Electricity Board (CEB): The CEB
currently owns a sustainable cost effective
diversified generation mix. The Power
Generation mix of the country was
substantially changed along with the
commissioning of the 3rd phase of
Lakvijaya
Coal
Power
Project.
Electrification level of the country reached
98 percent and the increase demand for

electricity is expected with the potential
development of the industry and services
sector.
The electricity generation cost per unit
was significantly reduced to Rs. 13.82
kWh in the first eight months in 2015,
compared to Rs. 20.15 kWh in 2014 mainly
due to the increased use of hydropower
with the favourable weather conditions.
45
Meanwhile, power generation from coal

was around 40 percent in first eight
months of 2015, compared to 26 percent in
2014. This has enabled the CEB to have a

profit of approximately Rs. 14.6 billion for
the first eight months of 2015.
Table 25 : Composition of Generation Capacity

Item
Installed Capacity MW
Composition (%)
Major Hydro
CEB-Coal
CEB - Oil
IPP - Oil
NCRE
1,377
900
544
571
445
35.9%
23.5%
14.2%
14.9%
11.5%
Total
3,837
100.0%
Source: Ceylon Electricity Board
Ceylon Petroleum Corporation (CPC):

Government is in the process of reviewing
the existing energy policy to make both
the CPC and the CEB self-financing
entities while maximizing the benefit to
the stakeholders. The CPC incurred a loss
of Rs. 4,900 million at the end of August
2015, compared to a marginal profit of Rs.
500 million recorded in the same period of
2014. The CPCs outstanding borrowings
from two state commercial banks
decreased to Rs. 330 billion as at end
August 2015 from Rs. 375 billion at the
end of 2014. In order to strengthen the
financial position of the CPC, the General
Treasury has proposed to issue Treasury
bonds amounting to Rs.100 billion in 2015.
In addition, government issued Treasury
Guarantees worth of US$ 1,350 million to
secure the bank exposures.
Water
National Water Supply and Drainage
Board (NWSDB): During the first eight
months of 2015, a total of 88,917 new
water
connections
were
provided
particularly in Gampaha, Kegalle, Kandy
and Colombo. The total revenue of the
NWSDB was Rs. 12,552 million during
the first eight months of 2015, with a total
operating cost of Rs. 12,504 million which

has resulted in a profit of Rs. 48 million.
During the period, several remedial
measures were taken to reduce the nonrevenue water, such as replacing defective
meters and pipe lines, disconnecting
several illegal connections, installing
several new bulk meters and valves,
repairing leaks and conducting meter
reading audits.
Ports
Sri Lanka Ports Authority (SLPA): The
SLPA recorded a profit before tax of Rs .
5.6 billion during the first eight months of
the year as against the budgeted profit
before tax of Rs. 4.6 billion. Total revenue
of the SLPA during the first eight months
of 2015 was Rs. 25.3 billion and total
expenditure was Rs. 19.7 billion.
Outstanding borrowings of the SLPA
marginally decreased to Rs. 216 billion as
at end June 2015 from Rs. 218 billion as at
end 2014. The interest cost of foreign loans
was Rs. 1.6 billion during the first eight
months of 2015.
East Container Terminal commenced its
operations on 27th April 2015 under the
46
direct control of the SLPA and it is now

expected
to
accommodate
Latest
Generation Container ships. With effect
from January 2015, salaries of the SLPA
staff were increased with an objective of
improving efficiency by allowing the
SLPA employees to compete with other
ports in the region and other private
container terminals and also to maintain
industrial peace without any employee
unrest. Implementation of prudent debt
management is necessary to ensure debt
sustainability due to the substantial
amount of outstanding loans at SLPA.
Aviation
Airport and Aviation Services (Sri
Lanka) Limited (AASL): The AASL
handled around 4.9 million passengers
including 710,384 transit passengers
January to July 2015 which was a 11
percent increase, compared to the same
period of 2014. The AASL also recorded
11 percent growth in its revenue by
earning Rs. 8,513 million during January
to July 2015, compared to Rs. 7,696 million
in the same period of 2014. Aeronautical
revenue increased by Rs. 173 million or 9
percent while non-aeronautical revenue
increased by Rs. 175 million or 7 percent
in the period of 2015, compared to the
same period of 2014. The AASL recorded
a profit after tax of Rs. 1,957 million for
the first seven months period of 2015
which was a 13 percent improvement
compared to the profit after tax of Rs.
1,739 million recorded in the same period
of 2014. Total foreign borrowings of the
AASL as at 31st August 2015 stood at Rs.
5,747 million. The company paid Rs. 371
million for interest payments as at end
August 2015 to service seven foreign loans
obtained through the General Treasury.
The AASL will commence servicing of the
loan amounting to US$ 190 million

obtained for the construction of Mattala
Rajapaksha International Airport from
September 2015.
Sri Lankan Airlines Limited (SLA):
Government decided to prepare a viable
and comprehensive business plan for the
SLA and Mihin Lanka Ltd. (MLL) and
amalgamate these two airlines due to the
substantial losses incurred. Both airlines
have already prepared their business
plans and obtained Cabinet approval for
the same. The SLA has obtained a credit
facility of Rs. 30 billion from Bank of
Ceylon and Peoples Bank with the Letters
of Comfort from the General Treasury for
the SLA and the MLL until the capital
infusion is to be made by the General
Treasury with the Cabinet approval.
The SLA earned a revenue of Rs. 86.6
billion for the first eight months of 2015, 6
percent increase over the budgeted
revenue. Also, it was a 4.5 percent
increase, compared to the same period of
2014. Total expenditure of the SLA was
Rs. 93.08 billion up to end August and
total loss for same period was Rs. 6.48
billion. This has resulted in increasing the
accumulated losses of the SLA to Rs. 131
billion.
State Banks
Bank of Ceylon (BOC): Bank of Ceylon
(BOC) offers online access and operates
540 Automated Teller Machines (ATMs)
service points in small towns and major
cities
across
the
island.
The
transformation programme Wenesa,
which was commenced in 2014 to
introduce
an
organization
wide
transformation process in employees,
business processes and technology, is
47
delivering positive results to become a

customer centric bank.
The asset base of the BOC recorded an
increase of 5.8 percent to Rs. 1,406 billion
by the end of June 2015 from Rs. 1,329
billion as at end 2014. The deposit base of
the bank increased to Rs. 965 billion,
compared to Rs. 934 billion as at end 2014.
The non-performing loan ratio of the Bank
increased to 5.4 percent during the first
half of 2015, in comparison to 3.8 percent
as at end 2014. The BOC has recorded a
profit before tax of Rs. 9.1 billion for the
first six months of 2015, compared to Rs.
8.6 billion in the corresponding period in
2014.
Peoples Bank (PB): Peoples Bank (PB),
the second largest state bank in Sri Lanka
which surpassed one trillion asset base,
commenced the year 2015 with a new
strategic plan to create and foster a
performance oriented and customer
centric culture. With the aim of being a
more digitally capable bank, the PB is
expanding its mobile and internet
banking services. Banks asset base
recorded an increase of 4.7 percent to Rs.
1,075 billion by the end June 2015 from
Rs. 1,027 billion as at end 2014. Deposit
base of the bank increased by 7.9 percent
to Rs. 855.7 billion by the end of June
2015, in comparison to Rs. 793.3 billion as
at end 2014. Banks Current Accounts to
Savings Accounts (CASA) ratio was 46.3
percent as at end 2014, a slight decline of
0.6 percent and stood at 45.7 percent by
the end June 2015. The PB recorded a
profit before tax of Rs.8.5 billion for the
first six months of 2015, in comparison to
Rs.6.2 billion for the corresponding period
of 2014.
National Savings Bank (NSB): The NSB,

in the context of changing customer needs
and developments in information and
communication technology, identified the
need of augmenting the products and
services, expanding the branch network,
benchmarking the service standards and
streamlining the internal systems and
procedures. Bank extended its branch
network to 240 branches with the opening
of 4 new branches during the period. With
the goal of maintaining a market share of
12 percent in deposits over the next few
years, banks initiatives to mobilize
deposits resulted in an increase in
deposits by Rs. 21 billion by the end June
2015, in comparison to Rs. 554 billion at
end 2014. Total assets of the bank
as at end June 2015, compared to Rs. 779
billion as at end 2014. The NSB recorded a
profit before tax of Rs. 6.2 billion for the
first six months of 2015, in comparison to
Rs. 3.7 billion in corresponding period in
2014. Banks interest margin improved to
3.49 percent during the period from 3.0
percent in 2014.
Insurance
Sri Lanka Insurance Corporation (SLIC):
In the context of dynamic and competitive
business environment, the SLIC recorded
a profit before tax of Rs. 1,480 million
during the eight months of 2015 and
registered a total revenue of Rs. 17.4
billion which was a decline, compared to
Rs. 19.5 billion during the corresponding
period of 2014. Even though initiatives
have been taken to split life and general
insurance business into two separate
companies as required under the
Regulation
of
Insurance
Industry
(Amendment) Act, No. 03 of 2011, it was
suspended due to the protesting of trade
48
unions. A new management was

appointed for the SLIC and the
subsidiaries in 2015 and initiatives were
taken for effective management of the
SLIC. Life policy holders of the SLIC were
benefited with Rs. 4.7 billion bonus
during the period, which was the biggest

bonus ever declared in the industry and
working on the life insurance penetration.
The SLIC remains as the market leader for
general insurance.
Table 26 : Levy/Dividend of State Owned Enterprises

(Rs. Million)
Item
2011
2012
2013
2014
As at
31.08.2015
Levy
20,189
32,774
20,960
29,697
13,685
4,560
8,260
5,060
4,060
2,110
9,050
7,200
10,100
10,000
10,000
10,000
State Mortgage & Investments Bank
25
40
10
Regional Development Bank
500
500
75
50
50
25

Telecommunication Regulatory
Commission
State Timber Corporation

State Pharmaceuticals Manufacturing
Corporation
National Insurance Trust Fund
59
20
20
25
3,495
4,200
3,200
4,000
1,000
Geological Survey and Mines Bureau
740
750
700
650
100
100
75
25
2,000
210
200
100
National Gem and Jewellery Authority

Sri Lanka Export Credit Insurance
Corporation
Board of Investment
National Lotteries Board
502
500
Securities and Exchange Commission
94
Insurance Board of Sri Lanka

State Institutions Temporary Surplus
Trust Fund
Sri Lanka Rupavahini Corporation
300
10,700
Sri Lanka Convention Bureau
12
Sri Lanka Tourism Promotion Bureau
500
Civil Aviation Authority
350
200
250
400
State Pharmaceutical Corporation
50
75
Sri Lanka Standards Institution
20
National Livestock Development Board
Dividends
14,162
13,987
14,208
17,117
6,672
Bank of Ceylon
4,020
5,346
5,346
6,846
3,646
People's Bank
4,500
4,658
4,816
6,316
1,816
Lankaputhra Development Bank
18
36
36
National Development Bank
10
49
Sri Lanka Telecom PLC
536
759
760
759
795
68
42
43
49
500
1,700
43
31
47
54
55
2,406
500
500
250
Lanka Logistics (Pvt) Ltd
Lanka Electricity Company Ltd
75
75
25
87
70
50
40
40
10
Chilaw Plantation Ltd
75
75
35
20
Pussellawa Plantation Ltd
28
22
14
Kotagala Plantation Ltd
34
15
33
13
De La Rue Lanka (Pvt) Ltd

Lanka Mineral Sands Ltd
Lanka Industrial Estates Ltd
Airport and Aviation Services Ltd
Kurunegala Plantation Ltd

Kalubovitiyana Tea Factory
Namunukula Plantation Ltd

Elpitiya Plantation Ltd
12
1,750
1,001
2,199
2,001
80
Lanka Phosphate Ltd
20
40
25
35
Independence Television Network Ltd
49
88
50
125
Rakna Arakshaka Lanka Ltd
10
17
68
Colombo Commercial Fertilizer Ltd
10
12
10
Paranthan Chemicals Company Ltd
10
12
38
54
10
Sri Lanka Insurance Corporation Ltd

Lanka Sugar Company Ltd
Ceylon Fertilizer Ltd

Ceylon Shipping Corporation Ltd
Kahatagaha Graphite Lanka Ltd
0.1
97
11
Skills Development Fund
Ceylon Agro Industries Ltd
0.8
46,813
20,357
Lanka Leyland Ltd
35
Manthai Salt Ltd
Asian Reinsurance Corporation
Total
34,351
46,761
35,168
Sources: SOBEs, Department of Public Enterprises
50
5. THE ECONOMY
5.1 Economic Growth
The Sri Lankan economy demonstrated a
robust growth of 5.6 percent during the
first half of 2015, in comparison to a
growth of 1.3 percent recorded during the
corresponding period of 2014 reflecting
the improvements of economic activities
in the country amidst challenges in
domestic as well as external fronts. The
favourable macroeconomic environment,
peaceful atmosphere in the country with
good governance initiatives and reenergized tourism industry provided an
impetus for the growth. The Agriculture,
Industry and Services sectors contributed
to GDP by 7.4 percent, 26.5 percent and
59.7 percent, respectively in the first half
of 2015.
The Agriculture sector recorded a growth
of 3.3 percent during the first half of 2015,
in comparison to a negative growth of 0.7
percent recorded in the same period of
2014 benefitting from the strong
performance of paddy, coconut, forestry
and marine fishing. In addition, the
highest ever Yala paddy production was
recorded in 2015 amounting to 1.9 million
MT. However, the growth in rubber, tea
and spices production slowed down due
to heavy rainfall in such crops growing
areas.
The Industry sector also regained its
momentum registering a growth of 1.3
percent in the first half of 2015, in
comparison of 4.5 percent contraction
recorded in the same period of 2014.
Notably, food, beverages and tobacco subsector showed a strong performance
recording a 6.5 percent growth in the
review period, compared to a 0.4 percent

contraction registered in the same period
of 2014. The performance of the Industry
sector was also driven by significant
growth
of
value-added
industrial
production of several sectors: chemical
products and basic pharmaceutical
products; basic metals and fabricated
metal production; rubber and plastic
products; electricity, gas, steam and air
conditioning supply and textile, wearing
apparel and leather products. In addition,
the growth was contained by a relatively
lower growth in construction, mining and
quarrying and nonmetallic mineral
products sub-sectors.
The Services sector contributed for 59.7
percent to GDP, registering a robust
growth of 7.1 percent in the reference
period, compared to 4.2 percent growth
recorded in 2014. This significant growth
was mainly driven by the expansion of
wholesale and retail trade, transport, real
estate and financial services activities. The
wholesale and retail trade sub-sector
expanded by 5.8 percent, real estate
activities and financial services grew by
16.2 percent and 12.7 percent, respectively
in the first half of 2015. The financial
services, real estate and insurance sectors
registered a strong growth in the first half
of 2015 following a relaxed monetary
policy adopted by the Central Bank with a
resultant decline in interest rates and cost
of borrowings. Meanwhile, accommo
-dation, food and beverages sub-sector
demonstrated a robust growth of 8.6
percent, compared to the contraction of
3.6 percent recorded in the first half of
2014 due to increased tourists arrivals by
14.1 percent in the first six months of 2015.
51
Chart 9 : GDP Growth

9.9
10
Growth Rate(%)
6.7
4.7
4.4
4
2
1.9
0.7
0
Q1
Q2
2014
5.2 Agriculture
Agriculture, forestry and fishing sector
grew by 3.3 percent during the first half of
2015, in comparison to a negative growth
of 0.7 percent recorded in the same period
of
2014
benefitting
from
strong
performances of paddy, coconut, forestry
and marine fishing. The favourable
weather condition prevailed in the
country helped record the highest ever
Yala paddy production in 2015. In
contrast, the value added tea production
contracted by 1.2 percent in the first half
of 2015due to the unfavourable weather
condition prevailed particularly, during
the second quarter of 2015. Meanwhile,
the marine fishing sub-sector expanded
by 4.2 percent in the first half of 2015.
However, the value-added fresh water
fish production dropped by 25.2 percent
in the review period, compared to a
higher growth of 82.5 percent in 2014
2015
Q3
Q4
mainly due to the reduction of fish catch

followed by declined release of fingerlings
to the tanks in last months of 2014.
Furthermore, Agriculture sector was
supported by the forestry and logging,
coconut and other perennial crops subsectors. However, rubber and spices
production
declined
due
to
the
unfavourable
rainfall
prevailed.
Governments
commitment
towards
achieving food security in the country is
being progressed in 2015 by providing
agriculture infrastructure, provision of
agricultural extension services, credit
facilities and interest subsidies through
special loan schemes, provision of high
quality seed and planting material,
fertilizer at subsidized prices for paddy
and other crops, maintaining better farmgate prices for fresh milk, paddy, tea and
rubber and tax policy measures to protect
local farmers as well as consumers.
52
Chart 10 : Composition of GDP - First Half 2015
Services
60%
Industries
27%
Agriculture,
Forestry and
Fishing
7%
Rice
Sri Lanka is now self-sufficient in rice
with excess production over consumption
requirements. The value addition of
paddy production, which accounted for
8.7 percent of Agriculture sector, grew by
a higher rate of 48.9 percent during the
first half of 2015, compared to 30.1 percent
contraction recorded in the first half of
2014. The total paddy production in 2015
marked a record of 4.8 million MT due to
the highest ever paddy production of
around 1.9 million MT recorded in Yala
season and increased 2014/2015 Maha
production around to 2.9 million MT. This
was due to the increase extent cultivated
and enhanced average yield of paddy in
2015. With this bountiful harvest,
government was compelled to declare
guaranteed prices of Rs. 50 per kg for
Samba and Rs. 45 per kg for Nadu.
Tea
The tea sub-sector, which accounted for
12.5 percent of Agriculture sector,
contracted by 1.2 percent during the first
half of 2015, compared to a negative
Taxes less
Subsidies on
Products
6%
growth of 1.0 percent during the same

period of 2014. The tea production
declined by 0.6 percent to 172.6 million kg
in the first half of 2015, compared to 173.6
million kg in the same period of 2014. The
continued decrease in international prices
of tea was resulted to means returns to tea
producers. Government has taken steps to
venture into untapped markets i.e. Turkey
to promote Sri Lankan tea due to the
decline in global demand particularly
from main tea buyers, such as Russia,
Syria, Libya and the Middle East
emanating from geo-political uncertainty,
economic sanction on Iran and sharp
depreciation of their currencies coupled
with overall global commodity price
declines. The earnings from tea exports
also decreased by 14.3 percent to US$ 683
million in the first six months of 2015,
compared to US$ 797 million in review
period of 2014. The average Colombo
auction tea prices declined by 14.1 percent
to Rs. 400.3 per kg in the first half of 2015,
compared to Rs. 466.2 per kg in the same
period of 2014. Hence, government
committed to safeguard tea producers
introducing a guaranteed price of green
tea leaf at Rs. 80 per kg in 2015.
53
Chart 11 : Composition of Agriculture Sector First Half 2015
Fruits
7%
Oleaginous
Fruits
10%
Tea
12%
Vegetables
9%
Rice
9%
Cereals
3%
Other
2%
Fresh Water
Fishing and
Fresh Water
Aquaculture
2%
Rubber
The rubber sub-sector, which accounted
for 4.8 percent of Agriculture sector,
registered a negative growth of 17.5
percent in the reference period, compared
to a contraction of 2.4 percent recorded in
same period of 2014. Declining demand
for natural rubber in the international
market resulted in abandoning tapping by
many small holders coupled with
reduction of number of tapping days due
to the heavy rains were responsible for
this contraction. The total rubber
production decreased by 17.4 percent to
50.4 million kg in the first half of 2015,
compared to 61 million kg in the same
period of 2014. Meanwhile, the average
Colombo auction rubber prices of Ribbed
Smoked Sheet (RSS) 1 and RSS 2 declined
by 14.9 percent to Rs. 255.96 per kg and
13.4 percent to Rs. 301.06, respectively
during the first half of 2015. Rubber
exports decreased by 53.0 percent to US$
14.2 million during the first six months of
2015.
However,
the
declining
international prices of rubber opens
Spices, Aromatic,
Drug and
Pharmaceutical
Crops
8%
Rubber
5%
Other Perennial
Crops
3%
Animal
Production
4%
Forestry and
Logging
8%
Marine Fishing
and Marine
Aquaculture
18%
avenues for manufacturing of rubber

products for export market with value
addition.
Coconut and related products
The value-added production of coconut
and related products accounted for 10.2
percent of Agriculture sector, grew by 3.0
percent during the first half of 2015,
compared to a higher growth of 10.4
percent recorded in 2014. The total
coconut production increased by 4.4
percent to 1,489 million nuts in the first
half of 2015, compared to 1,426 million
nuts in 2014. The Colombo auction
coconut prices declined by 15.2 percent to
Rs. 32.80 per nut from Rs. 38.70 per nut.
In addition, total coconut exports
increased by 4.9 percent to US$ 174.2
million during the review period of 2015.
Meanwhile, the export of coconut kernel
products increased by 18.9 percent to US$
108 million and other coconut products
decreased by 9.8 percent to US$ 66.2
million during the first half of 2015, in
comparison to the same period of 2014.
54
Table 27 : Sectoral Composition of GDP at Constant (2010) Prices (Rs. Million)

First Half
Sector
1
2
3
4
5
6
7
8
10
11
12
13
14
15
16
17
18
19
20
21
22
Agriculture, Forestry and

Fishing
Growing of Cereals
(except rice)
Growing of Rice
Growing of Vegetables
Growing of Sugar Cane,
Tobacco and Other Nonperennial Crops
Growing of Fruits
Growing of Oleaginous
Fruits ( Coconut, King
Coconut, Oil Palm)
Growing of Tea (Green
Leaves)
Growing of Other
Beverage Crops (Coffee,
Cocoa etc,.)
Growing of Spices,
Aromatic, Drug and
Pharmaceutical Crops
Growing of Rubber
Growing of Other
Perennial Crops
Animal Production
Plant Propagation and
Support Activities to
Agriculture
Forestry and Logging
Marine Fishing and
Marine Aquaculture
Fresh Water Fishing and
Fresh Water Aquaculture
Industries
Mining and Quarrying
Manufacture of Food,
Beverages and Tobacco
Products
Manufacture of Textile,
Wearing Apparel and
Leather Related products
Manufacture of Wood
and Products of Wood
and Cork, except
Furniture
Manufacture of Paper
Products, Printing and
Reproduction of Media
products
Manufacture of Coke and
Growth (%)
2015
2014
(a)
-0.7
3.3
2012
2013
2014
592,445
611,676
598,042
290,294
299,945
12,521
14,307
14,040
7,065
7,822
0.3
10.7
62,289
51,244
2,254
65,607
54,153
2,441
53,425
54,914
2,285
17,702
27,844
1,137
26,364
27,843
1,209
-30.1
-1.7
-7.6
48.9
()
6.5
38,248
62,201
37,385
53,424
40,880
59,413
19,252
29,541
19,658
30,422
8.7
10.4
2.1
3.0
72,100
74,734
73,741
37,898
37,461
-1.0
-1.2
1,319
1,321
1,457
728
992
10.3
36.1
44,426
50,833
52,421
26,042
25,475
-0.3
-2.2
44,249
15,167
37,987
14,344
28,676
14,761
17,753
7,314
14,655
8,562
-2.4
2.6
-17.5
17.1
29,511
9,105
36,599
9,183
27,295
9,421
13,260
4,705
13,233
4,754
-23.3
2.4
-0.2
1.0
38,188
97,063
43,044
103,879
46,608
104,636
22,532
50,649
23,576
52,780
8.9
3.2
4.6
4.2
12,560
12,435
14,069
6,872
5,138
82.5
-25.2
2,035,600
184,468
507,121
2,119,080
198,447
507,127
2,145,131
202,845
515,209
1,054,083
101,461
248,868
1,067,677
95,727
265,150
-4.5
-4.4
-0.4
1.3
-5.7
6.5
244,496
264,527
269,636
143,137
144,741
-1.4
1.1
23,472
25,258
25,970
12,785
12,499
-13.7
-2.2
24,738
24,925
24,763
12,270
13,141
-4.8
7.1
28,858
27,514
29,602
14,924
14,123
6.5
-5.4
2014
2015 (a)
55
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
Refined Petroleum
Products
Manufacture of Chemical
Products and Basic
Pharmaceutical Products
Manufacture of Rubber
and Plastic Products
Manufacture of Other
Non-metallic Mineral
Products
Manufacture of Basic
Metals and Fabricated
Metal Products
Manufacture of
Machinery and
Equipment
Manufacture of Furniture
Other Manufacturing and
Repair and Installation of
Machinery and
Equipment
Electricity, Gas, Steam
and Air Conditioning
Supply
Water Collection,
Treatment and Supply
Sewerage, Waste,
Treatment and Disposal
Activities
Construction
Services
Wholesale and Retail
Trade
Transport of Goods and
Passenger including
Warehousing
Postal Courier Activities
Accommodation, Food
and Beverage Service
Activities
Programming and
Broadcasting Activities
and Audio Video
Productions
Telecommunication
IT Programming
Consultancy and Related
Activities
Financial Service
Activities and Auxiliary
Financial Services
Insurance, Reinsurance
and Pension Funding
Real Estate Activities,
75,582
81,982
83,473
41,299
44,498
-0.6
7.7
83,307
82,187
79,685
36,008
38,776
-0.4
7.7
87,090
81,037
77,101
40,073
36,730
-5.6
-8.3
24,591
26,589
26,922
11,682
14,092
8.5
20.6
30,849
30,845
31,445
12,083
14,918
-7.4
23.5
63,922
41,962
67,488
44,443
80,989
55,636
40,261
27,882
42,073
29,526
8.9
16.9
4.5
5.9
75,262
76,789
78,636
38,640
40,206
0.3
4.1
10,554
10,975
11,475
5,701
5,884
5.7
3.2
14,572
15,511
17,354
8,453
10,343
9.9
22.4
514,757
4,245,462
848,686
553,438
4,405,644
859,977
534,391
4,689,910
892,696
258,556
2,244,934
480,819
245,249
2,404,109
508,936
-15.1
4.2
12.8
-5.1
7.1
5.8
805,391
849,539
888,091
377,380
385,532
-8.7
2.2
4,441
134,160
4,364
126,392
4,055
131,409
1,998
63,859
2,399
69,346
-9.0
-3.6
20.1
8.6
2,252
2,422
2,519
1,229
1,333
-0.6
8.5
26,450
7,972
27,395
9,693
30,909
10,597
15,473
5,247
18,217
5,000
22.2
11.6
17.7
-4.7
364,688
386,009
450,925
219,427
247,381
16.2
12.7
69,026
70,854
72,524
27,333
29,378
2.2
7.5
369,719
417,024
443,880
213,901
248,470
1.9
16.2
56
44
45
46
47
48
Including Ownership of
Dwelling
Professional Services
Public Administration
and Defence;
Compulsory Social
Security
Education
Human Health Activities,
Residential Care and
Social Work Activities
Other Personal Service
Activities
Gross Value Added
(GVA), at basic prices
(+) Taxes less Subsidies
on Products
Gross Domestic
Product(GDP), at market
prices
155,741
385,615
161,963
382,470
166,420
402,192
83,586
184,276
73,973
198,115
2.9
4.9
-11.5
7.5
167,107
173,898
157,477
146,551
173,529
147,683
86,017
68,439
82,589
69,052
14.7
7.4
-4.0
0.9
730,316
803,514
872,482
415,952
464,386
2.4
11.6
6,873,506
7,136,399
7,433,083
3,589,312
3,771,731
1.1
5.1
715,011
709,802
762,897
227,709
257,256
3.9
13.0
7,588,517
7,846,202
8,195,979
3,817,021
4,028,987
1.3
5.6
Source: Department of Census and Statistics

(a) Provisional
Beverage Crops and Spices

The value addition of beverage crops,
such as coffee and cocoa recorded a
higher growth of 36.1 percent during the
growth registered in the same period of
2014. Meanwhile, spices, aromatic, drugs
and pharmaceutical crops sub-sector
contracted by 2.2 percent in the first half
of 2015 as against a negative growth of 0.3
percent recorded in the first half of
2014due to the unfavourable weather
condition prevailed. However, the export
earnings from spices increased by 55.3
percent to US$ 170.8 million during the
review period.
Cereals, Fruits and Vegetables
The Cereals, fruits and vegetables subsector accounted for 18.4 percent of
Agriculture sector, recorded a growth of
2.1 percent in the first half of 2015,
compared to 2.0 percent growth registered
in the same period of 2014, benefitting
from the expansion of cereals by 10.7

percent and fruits by 2.1 percent.
Marine and Fresh Water Fishing
The fishing sub-sector consisting of
marine fishing and fresh water fishing
accounted for 19.4 percent of Agriculture
sector and 1.4 percent of GDP, grew by 0.7
percent during the first half of 2015,
compared to a higher growth of 8.9
percent recorded during the same period
in 2014. The marine fishing recorded 4.2
percent growth while contributing 91
percent to the fishery industry in the first
half of 2015. Government continued its
support to the development of marine
fishing by establishing fishery harbours
throughout the country, in particular in
the Northern and Eastern provinces. In
contrast, fresh water fishing and
aquaculture contracted by 25.2 percent
due to the substantial reduction of the
release of fingerlings to the tanks in last
months of 2014 and less rainfall in water
57
catchment areas were negatively affected

to this performance.
Animal Production
The
animal
production
sub-sector
consisting of milk, egg and value of
slaughtered animals, accounted for 4.4
percent of Agriculture sector, contracted
by 0.2 percent during the first half of 2015,
compared to a negative growth of 23.3
percent recorded during the same period
of 2014. The government implemented
several assistance programmes, including
better farm gate prices of milk and
granting
tax
concessions
towards
lowering the cost of production.
Guaranteed price of fresh milk was
increased by Rs. 10 per litre to Rs. 70 per
litre from Rs. 60 per litre in 2015.
5.3 Industry
The Industry sector recorded a renewed
growth of 1.3 percent during the first half
of 2015, compared to a 4.5 percent
contraction in the first half of 2014 with a
moderate expansion of all forms of
activities except mining and quarrying,
manufacturing
of
wood,
refined
petroleum products, non-metallic mineral
products and construction sub-sectors.
During the review period, manufacturing
and electricity, gas, water and sewerage
sub-sectors increased by 4.5 percent and
6.9 percent, respectively. In contrast, the
construction and mining and quarrying
sub-sectors contracted by 5.1 percent and
5.7 percent, respectively.
Chart 12 : Composition of Industries Sector-First Half 2015

Manufacturing
63%
Mining and
Quarrying
9%
Construction
23%
Sewerage, Waste,
Treatment and
Disposal Activities
1%
Water
Collection, Treatme
nt and Supply
0.5%
Manufacturing
The manufacturing sub-sector which
accounted for 62.7 percent of the Industry
sector and 16.6 percent of GDP, grew by
4.5 percent in the reference period,
compared to a 0.1 percent contraction
recorded in the first half of 2014, mainly
driven by higher performance of food,
Electricity, Gas,
Steam and Air
Conditioning
Supply
2%
beverages and tobacco and

wearing and apparel sub-sectors.
textile,
The
main
contributor
to
the
manufacturing sector i.e. food, beverages
and tobacco sub-sector, which accounted
for 39.6 percent of manufacturing sector,
recorded a growth of 6.5 percent in the
contraction recorded in the same period of
58
2014. This was supported by increased

domestic production and enhanced
demand for imports.
The textile, wearing apparel and leather
related products sub-sector, which
accounted for 3.6 percent to the GDP and
21.6 percent of the manufacturing sector,
recorded a 1.1 percent growth during the
first half of 2015, compared to negative
growth of 1.4 percent during the
corresponding period in 2014. The private
sector enthusiasm through product and
market
diversification
amidst
the
challenges
emanated
from
the
uncertainties in major export destinations,
increased seasonal demand and new
orders placed by the US market, helped
rebound the growth of this sector.
Meanwhile, machinery and equipment
sub-sector, which accounted for 2.2
percent of manufacturing sector, recorded
a robust growth of 23.5 percent in 2015,
compared to a negative growth of 7.4

percent in 2014.
The basic metals and fabricated metal
products sub-sector, which accounted for
2.1 percent of the manufacturing subsector, recorded a higher growth of 20.6
percent, compared to 8.5 percent growth
recorded in the first half of 2014. The
chemical
products
and
basic
pharmaceutical
products
sub-sector
recorded a 7.7 percent growth in the first
half of 2015, compared to a negative
growth of 0.6 percent during the
respective
period
of
2014.
The
improvement in chemicals and chemical
products could be attributed to the
increased output in related industries,
such as fertilizer, paint, soap and
detergent. Increased production of tyres
and tubes for both domestic and export
markets contributed to the growth in
rubber production in the review period.
Chart 13 : Composition of Manufacturing Sector-First Half 2015

Textile, Wearing
Apperal and
Chemical
Leather RelatedProducts and Basic
products
Pharmaceutical
22%
Products
Food, Beverages
and Tobacco
Products
40%
7%
Rubber and
Plastic Products
6%
Other Nonmetallic Mineral
Products
5%
Other
12%
Electricity, Gas, Water and Sewerage

The electricity, gas and steam and airconditioning supply sub-sector recorded
4.1 percent growth, compared to lower
growth of 0.3 percent in the same period
Furniture
6%
Machinery and
Equipment
2%
of 2014. This improvement was mainly

supported by the increase in hydropower
generation during the reference period.
Meanwhile,
the
water
collection,
treatment and supply sub-sector grew by
59
compared to a 5.7 percent growth

recorded during the same period of 2014.
The sub activity of sewerage, waste,
treatment and disposal activities grew by
compared to 9.9 percent growth with
same period in year 2014.
5.4 Services
The Services sector contributed to 59.7
percent to GDP in the first half of 2015,
with a growth of 7.1 percent, compared to
4.2 percent recorded in the same period of
2014. The wholesale and retail trade
sector, which contributed to a major share
to the Services sector, grew by 5.8 percent.
In addition, the transport and real estate

activities, financial services and public
administration sub-sectors expanded
considerably in the reference period. The
accommodation, food and beverage subsector recorded a higher growth of 8.6
percent in first half of 2015, compared to
3.6 percent contraction recorded in the
same period of 2014, while postal and
courier activities sub-sector grew by 20.1
percent, compared to 9.0 percent
contraction in first half of 2014. The
improvement in the domestic trade
activities emanated from improved
demand
and
prevailing
peaceful
environment of the country helped
expand the Services sector.
Chart 14 : Composition of Services Sector -First Half 2015

Wholesale and
Retail
Trade,Transportatio
n and
Storage, Accommod
ation and Food
Service Activities
40%
Other Services
19%
Public
Administration, Def
ence,Education,Hu
man Health and
Social Work Activies
15%
3%
Real Estate
Activities
10%
Wholesale and Retail Trade

The wholesale and retail trade sub-sector,
which accounted for 21.2 percent to the
Services sector and 12.6 percent to GDP,
recorded a moderate growth of 5.8
percent in the first half of 2015, compared
to 12.8 percent growth recorded in the
Financial and
Insurance Activies
12%
Information and
Communication
1%
same period of 2014 with increased

domestic demand supported by low
interest rates regime and continued
enhanced income of the people. The value
added wholesale and retail trade activity
was affected by fluctuations in total
imports and total domestic agricultural
and industrial production.
60
Table 28 : Selected Indicators of Services Sector

2011
2012
2013
2014
2014
Jan-Aug
2015
Jan-Aug (a)
4,358
65,097
4,178
65,030
4,024
66,292
4,298
74,431
2,787
49,393
3,134
51,047
4,263
4,187
4,306
4,908
3,240
3,438
3,216
3,167
3,274
3,781
2,454
Jan-Jun
2,591
Jan-Jun (a)
Fixed Telephone Lines ( No.'000) *
3,608
3,449
2,707
2,679
2,696
2,677
Cellular Phones (No.000)

Wireless Phones ( No.000)
Internet and E-mail Subscribers
(No. 000)
Health Sector
Private Hospitals
Public Hospitals
No. of Beds (Government)
No. of Doctors (Government)
No. of Nurses (Government)
Financial Sector
Bank Branches and Other Outlets
Credit Cards in Use
Registered Finance Companies
Registered Leasing Companies
Tourism Sector
Tourist Arrivals
Tourist Earnings ( US $ million)
Room Occupancy Rate
Transport Services ( New
Registration)
Buses
Cars
Lorries **
Motor Cycles
Three Wheelers
Tractors and Trailers
18,319
2,667
20,324
2,450
20,315
1,645
22,123
1,556
21,012
1,604
24,235
1,551
845
1366
2,010
3,383
2,788
3,641
186
592
69,731
18,299
29,234
197
593
73,437
18,252
30,217
206
603
74,636
19,672
30,928
210
601
76,918
21,331
31,964
Jan-Jun
210
601
76,918
17,903
31,964
Jan-Aug
Jan-Jun (a)
217
601
76,781
18,792
32,225
Jan-Aug (a)
6,184
862,352
39
16
6,374
891,170
47
13
6,487
951,625
48
10
6,554
1,032,833
48
8
855,975
830
77.1
1,005,605
1,039
71.2
1,274,593
1,715
71.7
1,527,153
2,431
74.3
6,565
973,979 (b)
48
9
Jan-Sep
1,107,178
1,763
66.4 (c)
Jan-Sep
6,593
1,084,019 (b)
47
7
Jan-Sep (a)
1,315,839
2,095
n.a.
Jan-Sep (a)
4,248
57,886
14,818
253,331
138,426
23,194
3,095
31,546
12,266
192,284
98,815
21,892
1,805
28,380
5,872
169,280
83,673
13,038
3,851
38,780
5,121
272,885
79,038
9,082
2,031
24,982
3,648
160,890
57,202
5,978
3,264
74,966
5,459
273,691
96,987
7,823
Indicator
Port Services
Vessels Arrived (No)
Total Cargo Handled ( MT 000)
Total Container Handled ( TEUs
000)
Transshipment ( TEUs 000)
Telecommunication Sector
Source: Central Bank of Sri Lanka

(a) Provisional
(b) End June
(c) End August
* This includes the number of wireless phones
** This includes the number of special purpose vehicles
61
Table 29 : Performance of Tourism Sector

Month
Tourist Arrivals
Tourist Earnings (US$ Million.)
2012
2013
2014
2015 (a)
2012
2013
2014
2015 (a)
January
85,874
110,543
146,575
156,246
88.5
148.8
233.3
248.7
February
83,549
113,968
141,878
165,541
86.1
153.4
225.9
263.5
March
91,102
113,208
133,048
157,051
93.8
152.4
211.8
250.0
April
69,591
80,737
112,631
122,217
71.7
108.7
179.3
194.6
May
57,506
74,838
90,046
113,529
59.3
100.7
143.3
180.7
June
65,245
90,279
103,175
115,467
60.6
121.5
164.2
July
90,338
107,016
133,971
175,804
100.5
144.0
213.3
183.8
279.9
August
79,456
123,269
140,319
166,610
81.4
165.9
223.4
265.2
September
71,111
90,339
105,535
143,374
69.3
121.6
168.0
228.2
October
80,379
107,058
121,576
79.4
144.1
193.5
November
109,202
109,420
119,727
114.8
147.3
190.6
December
122,252
153,918
178,672
133.4
207.2
284.4
1,005,605
1,274,593
1,527,153
1,038.8
1,715.6
2,431.1
Total
1,315,839
2,094.6
Source: Sri LankaTourism Development Authority

(a) Provisional
Transportation of Goods and Passengers

including Warehousing
The transportation sub-sector, which
accounted for 16.0 percent to the Services
sector and 9.6 percent to GDP, recorded a
2.2 percent growth in the first half of 2015,
in comparison to 8.7 percent contraction
in the same period of 2014.
The transport sector was expanded by
increased importation of vehicles. The
total registration of new vehicles
increased by 92.4 percent during January
to June 2015. New registration of buses,
cars and motor bicycles rose by 116.5
percent, 188.3 percent and 88.9 percent,
respectively while new registration of
three wheelers, goods transportation
vehicles (lorries and other goods transport
vehicles) and land vehicles (tractors, hand
tractors and other land vehicles) increased
by 71.6 percent, 58.3 percent and 28.5
percent, respectively. This was mainly
due to the reduction of taxes on motor
vehicles coupled with the full leasing

facilities offered by the leasing companies
in a lower interest rate regime.
In terms of cargo handling, total number
of vessels arrived increased by 13.3
percent to 2,316 during the first six
months
of
2015,
reflecting
the
improvement in international trade
activities as well as expansion of
capacities in Sri Lankan port services. The
amount of transshipments handled
increased by 5.1 percent to 1.9 million
TEUs while the total container and total
cargo handling also increased by 6.4
percent to 2.5 million TEUs and 4.4
percent to 37.3 million MT in the first six
months of 2015.
The continuation of construction projects
such as, Matara- Beliatta-Kataragama new
rail line, Omanthai -Pallai rail line, MaduThalaimannar
rail
line,
PallaiKankasanthurai rail line and installation
of
new
railway
signaling
and
telecommunication
system
from
62
Anuradhapura-ThalaimannarKankasanthurai helped expand

transport related activities.
the
Accommodation Food and Beverages

The accommodation, food and beverages
percent to GDP and 2.9 percent to the
Services sector, recorded a significant
growth of 8.6 percent in the first half of
2015, in comparison to 3.6 percent
contraction recorded in the same period in
2014.
The increased tourist arrivals by 14.1
percent to 830,051 and resultant increase
in tourist earnings to US$ 1,321 million
helped expand the sector. The continued
revival in the tourism industry as a result
of the peace dividend, the government's
policy towards creating Sri Lanka as an
attractive tourist destination, increased
local tourism driven by the rise in
domestic income levels coupled with the
enhanced private sector investment in
hotels and restaurants provided an
impetus for this sector.
Telecommunication, Postal and Courier
Activities
The telecommunication sub-sector, which
contributed to 0.8 percent of Services
sector, recorded 17.7 percent moderate
growth in the first half of 2015, compared
same period of 2014. The growth was
mainly supported by the increase cellular
phone connections by 15.3 percent to 24.2
million in the first half of 2015, compared
to the same period of 2014. However, the
drop in fixed line telephone connections
by 1.0 percent to 2.7 million and wireless
connections by 3.3 percent to 1.5 million
slowed down the growth. Meanwhile, the
internet and e-mail subscribers also

increased by an impressive rate of 30.6
percent to 3.64 million during this period.
The growth momentum in internet
penetration is likely to continue in the
next few years mainly benefiting from tax
concessions provided to the sector, the
enhancement in the usage of computers
and the government policy towards
improving computer literacy and the
accessibility throughout the country. In
addition, the postal and courier activities
sub-sector, which contributed for 0.1
percent of Services sector recorded a
significant growth of 20.1 percent during
the review period in 2015, compared to 9.0
percent contraction recorded during the
same period of 2014.
Financial
Services
and
Auxiliary
Financial
The financial services activities and

auxiliary financial services sub-sector,
which accounted for 10.3 percent to the
Services sector and 6.1 percent share to
GDP, recorded a 12.7 percent growth
during the first half of 2015, compared to
16.2 percent growth recorded during the
same period in 2014. As such, the number
of bank branches and other outlets
increased to 6,582 by end June 2015 and
the number of credit cards in use also
increased by 11.3 percent to 1,083,977 by
end June 2015.
Real Estate, Professional Services and
Public Administration
The ownership of dwelling and real estate
percent to Services sector and 6.2 percent
to GDP, recorded a higher growth of 16.2
63
same period of 2014. Meanwhile,

professional services sub-sector, such as
legal and accounting accounted for 3.1
percent to the Services sector and 1.8
percent to the GDP and recorded a
contraction of 11.5 percent in the first half
of 2015, compared to 2.9 percent growth
recorded in the reference period of 2014.

Meanwhile, the public administration and
defence sub-sector which accounted for
8.2 percent to the Services sector and 4.9
percent of the GDP, recorded a high
growth of 7.5 percent in the first half of
2015, compared to 4.9 percent growth
recorded in the review period of 2014.
Table 30: Sectoral Distribution of GDP Growth (%)

Sector
Agriculture
2011
2012
2013
2014
First Half
2014
2015 (a)
4.6
3.9
3.2
-2.2
-0.7
3.3
Growing of Tea
-0.6
0.5
3.7
-1.3
-1.0
-1.2
Growing of Rice
16.8
-11.3
5.3
-18.6
-30.1
48.9
Growing of Rubber
3.5
-3.7
-14.2
-24.5
-2.4
-17.5
Growing of Cereal
0.4
18.2
14.3
-1.9
0.3
10.7
Growing of Vegetables
9.7
-2.1
5.7
1.4
-1.7
()
Animal Production
-3.2
12.0
24.0
-25.4
-23.3
-0.2
Forestry and Logging
-1.9
-10.2
12.7
8.3
8.9
4.6
Fishing
15.3
8.9
6.1
2.1
8.9
0.7
9.3
9.0
4.1
1.2
-4.5
1.3
18.6
24.6
7.6
2.2
-4.4
-5.7
Manufacturing Activities
3.5
3.2
2.3
2.9
-0.1
4.5
Other Industries
7.1
4.7
2.9
4.1
2.3
6.9
26.3
21.2
7.5
-3.4
-15.1
-5.1
8.9
11.2
3.8
6.5
4.2
7.1
11.7
7.7
1.3
3.8
12.8
5.8
Transportation and Storage
12.6
8.0
5.4
4.5
-8.7
2.3
Accommodation and Food Service

Activities
Information and Communication
20.2
27.3
-5.8
4.0
-3.6
8.6
6.8
8.5
7.7
11.4
18.0
11.8
Financial and Insurance Activities
Industry
Mining and Quarrying
Construction
Services
11.5
13.5
5.3
14.6
14.5
12.2
Real Estate Activities
6.8
12.7
12.8
6.4
1.9
16.2
13.6
22.3
4.0
2.8
2.9
-11.5
6.2
16.7
-10.8
5.7
11.4
-1.8
-4.4
5.0
-0.8
5.2
4.9
7.5
8.6
13.6
10.0
8.6
2.4
11.6
8.4
9.1
3.4
4.5
1.3
5.6
Education, Human Health and

Social Work Activities
Public Administration and Defence
Other Services (Excluding Ownservices)
GDP
(a) Provisional
64
Education, Health and Other Personal

Services
to the same period of 2014. Consequently,

the unemployment rate remained at 4.6
percent in the first half of 2015, yielding
the
benefits
from
the
increased
employment opportunities in many
sectors, such as construction, and public
and
private
investment
in
the
infrastructure in economic activities.
The
education
sub-sector
which
accounted for 2.0 percent to GDP
contracted by 4.0 percent in the period
under review, compared to 14.7 percent
growth recorded in the same period of
2014 while health care and social work
activities grew by 0.9 percent in the
reference period. Meanwhile, other
personal services activities, such as
personal grooming, funeral services and
computer repairs, which accounted for
11.5 percent to GDP and 19.3 percent to
the Services sector, expanded by 11.6
to slower growth of 2.4 percent in the
same period of 2015.
However, unemployment rate among age

group of 20-24 recorded high at 20.8
to 18.9 percent in the same period of 2014.
In
terms
of
educational
level,
unemployment by Advanced Level and
above education increased to 9.3 percent
in the first half of 2015, from 7.8 percent in
same period of 2014. In addition, female
unemployment rate increased to 7.5
percent while the male unemployment
dropped to 2.9 percent in comparison
with same period of 2014.
5.5 Unemployment
The employment level remained at 95.4
Unemployment (%)
Chart 15 : Unemployment
8
5.6 Monetary Sector Developments

The relaxed monetary policy stance
adopted by the Central Bank since end
2012 further continued in the first ten
months of 2015, benefiting from lower
inflationary environment and wellcontained inflation expectations to ensure
2015 Q2
2015 Q1
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
macroeconomic stability. Given signs of

sustained increase in credit flows to the
private sector, the Central Bank removed
the restriction placed on the access to its
Standing Deposit Facility (SDF) by Open
Market Operations (OMOs) participants
with effect from 02nd March 2015.
65
Following this, the overnight interest rates

moved upwards and settled within closer
to the lower bound of the policy rate
corridor.
pertaining to Treasury bills of 91 days,

181 days and 365 days increased by 87,
115 and 106 basis points, respectively
during the first ten months of 2015. The
Average Weighted Deposit Rate (AWDR)
decreased by 15 basis points and the
Average Weighted Fixed Deposit Rate
(AWFDR) stationed at 7.33 percent by end
October 2015. Meanwhile, the Average
Weighted Lending Rate (AWLR) declined
by 88 basis points to 11.03 percent by end
September 2015.
Meanwhile, the Standing Deposit Facility

Rate (SDFR) and Standing Lending
Facility Rate (SLFR) reduced to 6.00
This policy measure was taken to address
concerns over the behaviour of market
interest rate in consistent with falling
inflation and investment needs for
economic activity.
Reflecting the developments in domestic

credit, broad money (M2b) increased by
16.8 percent, on year on year basis, in
August 2015 remaining well within the
underlying monetary projections. As
expected, a sustained increase in credit
granted to private sector by commercial
banks was observed from the latter part of
2014.This was mainly supported by
prevailing low interest rate regime amidst
low inflation environment. Accordingly,
the credit to private sector grew by 21.3
percent, on year-on-year basis, recording
an overall increase of Rs. 3,069 billion by
end August 2015.
Despite some upward movements in

certain market segments, interest rates
continued its declining trend during the
first ten months of 2015 with the relaxed
monetary policy stance of the Central
Bank and high excess liquidity in
domestic money market supported by low
inflation expectations. The Average
Weighted Call Money Rate (AWCMR)
increased by 12 basis points to 6.33
percent and Average Weighted Prime
Lending Rate (AWPR) increased by 69
basis points from end December 2014 to
end October 2015. The yield rates
Chart 16 :Yield Rates, Monetary Aggregates and Private Sector Credit Growth
25
14
20
YOY % Change
16
10
8
6
15
10
5
2015 Jul
2015 May
2015 Mar
2015 Jan
2014 Sep
2014 Nov
2014 Jul
2014 May
2014 Jan
2015 Oct
2015 Jul
2015 Apr
2015 Jan
2014 Oct
2014 Jul
2014 Apr
2014 Jan
2013 Jul
2013 Jan
2013 Oct
Treasury Bill Yield

Monthly AWPR
Monthly AWDR
-5
2014 Mar
4
2013 Apr
12
Reserve Money
Broad Money
Credit to Private Sector
66
5.7 Inflation
The year-on-year inflation, as measured
by the Colombo Consumer Price Index
(CCPI) (2006/07=100) turned into a
deflation since July 2015 and recorded a 0.3 percent by the end of September,
which is the lowest level recorded since
February 2004. This lower level inflation
was supported by the prudent policies

adopted by the Central Bank and
government, well-contained inflation
targeting, moderation in price of both
food and non-food imported items and
downward revisions of LP gas and fuel
prices benefiting from the plunge in
international commodity prices.
Table 31 : Headline Inflation, Core Inflation and Food Inflation (Base: 2006/07=100)
Month
HEADLINE INFLATION
(%)
Annual
YoY
Average
2014 2015 2014 2015
CORE INFLATION* (%)

YoY
2014
2015
Annual
Average
2014 2015
FOOD INFLATION (%)

YoY
2014
2015
Annual
Average
2014 2015
January
4.4
3.2
6.5
3.2
3.5
2.1
4.1
3.4
1.3
12.0
7.1
4.7
February
4.2
0.6
6.0
2.9
3.1
0.8
3.8
3.2
0.9
9.5
6.1
5.4
March
4.2
0.1
5.7
2.5
3.4
1.4
3.5
3.0
1.2
6.3
5.1
5.8
April
4.9
0.1
5.6
2.1
3.4
2.4
3.3
2.9
3.4
4.3
4.6
5.9
May
3.2
0.2
5.3
1.9
3.3
2.6
3.1
2.9
4.0
4.6
4.3
5.9
June
2.8
0.1
4.9
1.7
3.5
2.8
3.0
2.8
3.1
4.0
4.0
6.0
July
3.6
-0.2
4.7
1.3
3.7
3.5
3.1
2.8
5.1
2.5
3.9
5.7
August
3.5
-0.2
4.5
1.0
3.9
3.9
3.2
2.8
4.8
2.2
3.8
5.5
September
3.5
-0.3
4.2
0.7
3.7
4.2
3.2
2.8
4.8
2.0
3.7
5.3
October
1.6
1.7
3.8
0.7
3.6
4.4
3.3
2.9
4.6
2.7
3.5
5.1
November
1.5
3.5
December
2.1
3.3
3.6
3.4
4.9
3.5
3.2
3.5
7.0
3.8
*CCPI Core Inflation - Excluding Fresh Food, Energy, Transport, Rice and Coconut
The year-on-year headline inflation

dropped significantly from January to
February 2015 with the downward
revision of fuel prices conducted in
January 2015 and the reduction of prices
of essential commodities by removing
applicable taxes. The CCPI further
declined in March to 0.1 percent and
remained unchanged up until April. The
CCPI marginally increased to 0.2 percent,
on a year-on-year basis, in May 2015
mainly due to the increase in food prices
during the month. However, it dropped to
0.1 percent in June and ended with
deflation from July to September 2015.

The core inflation, which indicates the
underlying inflation in the economy,
increased to 4.2 percent in September 2015
from 3.9 percent in August 2015, on a
year-on-year basis, while the annual
average
core
inflation
remained
unchanged for four consecutive months at
2.8 percent from June to September 2015.
In contrast, the headline inflation, on year
on - year basis, increased to 1.7 percent
in October 2015 due to the price increase
in food items such as rice, fish, potatoes
and red onion.
67
Chart 17 : Movements in Headline, Core and Food

Inflation (Base: 2006/07=100)
8
6
4
2
Oct
Sep
July
Aug
June
May
Apr
Feb
Mar
Dec
Headline Inflation (CCPI)
2015 Jan
Oct
Nov
Sep
July
Aug
June
May
Apr
Mar
Feb
2014 Jan
Food Inflation (CCPI)
Core Inflation (CCPI)
5.8 Stock Market

The performance of the Colombo Stock
Exchange (CSE) remained subdued
during major part of 2015. The All Share
Price Index (ASPI), a major stock market
index which tracks the performance of all
companies listed in CSE, declined by 2.8
percent and closed at 7,051 points by end
September 2015, compared to the 7,252
points recorded by end September 2014.
The more sensitive S&P SL 20 Index
reached 3,826 points, recording a 5.3
percent drop during the period under
review, compared to the same period of
2014.Meanwhile, the market capitalization
of the CSE decreased by 2.5 percent and
reached Rs. 2,991 billion by end

September 2015. During the first nine
months of 2015, the total equity turnover
amounted to Rs. 198,550 million, a decline
of 16.1 percent, compared to the same
period of 2014. The cumulative values of
foreign purchases and foreign sales were
amounted to Rs. 57,837 million and Rs.
61,753 million, respectively in the first
nine months of 2015, a resultant of net
outflow of Rs. 3,916 million reflecting a
disinvestment of short-term foreign
investments from emerging markets to the
US.
Table 32 : Movements in the Capital Market

End September
2014
2015
7,252
7,051
Indicators
2010
2011
2012
2013
2014
All Share Price Index (1985=100)

Milanka Price Index/ S&P SL 20
Index*
Market Capitalization (Rs. Bn.)
No. of Listed Companies in
Trading
Annual Turnover (Rs.Bn.)
6,636
6,074
5,643
5,913
7,299
7,061
5,229
5,119
3,264
4,089
4,038
3,826
2,210
2,214
2,168
2,460
3,105
3,066
2,991
242
272
287
289
294
293
296
570
546
214
200
341
237
199
118,761
68,854
33,972
60,873
83,554
68,055
61,753
92,426
49,875
72,653
83,657
104,771
74,194
57,837
-26,335
-18,979
38,681
22,784
22,217
6,139
-3,916
Foreign Sales (Rs. Million.)

Foreign Purchases (Rs. Million)
Net Purchases (Rs. Million)
Sources: Colombo Stock Exchange and Central Bank of Sri Lanka

* with effect from June 2012 Milanka Price Index has been replaced by S&P SL 20 Index
68
5.9 External Sector Developments

The external sector indicated a modest
performance during the first eight months
of 2015 with an expansion of trade deficit
by 5 percent to US$ 5,412 million,
compared to the same period of 2014
coupled with a significant increase of
tourist earnings by 17.1 percent to US$
1,866 million and workers remittances by
nearly 2 percent to US$ 4,598 million. This
has resulted in a deficit of US$ 1,795
million in the overall Balance of Payments
(BOP) in the reference period, compared
to a surplus of US$ 2,150 million recorded
in the same period of 2014. However, the
total exports contracted by 3.4 percent to
US$ 7,147 million while the imports
increased by US$ 4 million in the
reference period of 2015. Earnings from
exports declined due to the decreases in
all major categories of exports except
coconut, spices, transport equipment and
petroleum products. Earnings from tea,
textiles, garments and rubber products fell
due to the decline in global demand
stemming from geo-political uncertainty
in Russia and the Middle East,
depreciation of their currencies and global
financial and economic uncertainty
particularly in the Euro countries.
Meanwhile, expenditure on imports
increased by US$ 4 million due to the
reduction of intermediate goods imports
by 17.3 percent mainly due to the
significant decline in international oil
prices. However, there was a considerable
expansion in import expenditure on
consumer and investment goods by 37.3
As at end August 2015, the gross official
reserves of Sri Lanka remained at US$ 6.5
billion, which is equivalent to four months
of imports and total foreign assets of US$
8.2 billion was equivalent to 5.1 months of

imports. Meanwhile, the Central Bank has
decided
to
accommodate
greater
flexibility in the determination of the
exchange rate since 04th September 2015.
As a result, Sri Lanka rupee depreciated
as against the US$ in 2015 and it is
expected to strengthen the gross official
reserves and the trade account during the
year with stabilization of exchange rate.
However, government securities market
recorded a net outflow of US$ 920 million
in foreign investment during January to
September 2015, compared to net inflow
of US$ 100 million in the same period of
2014. The Colombo Stock Exchange (CSE)
recorded a net inflow of US$ 7.8 million in
the reference period, in comparison to a
net inflow of US$ 56.7 million recorded in
the same period of 2014 reflecting the
investor sentiment of possible interest rate
increase in the US.
Exports
Earnings from exports contracted by 3.4
percent to US$ 7,147 million in January to
August 2015, with a decrease in all major
exports categories with the exception of
coconuts, transport equipment and
petroleum products, compared to US$
7,399 million in the corresponding period
of 2014. This was mainly due to the
decline in export earnings from tea, textile
and garments, and rubber products.
In terms of Agricultural exports, earnings
from tea exports decreased by 16.8
percent to US$ 901 million in the first
eight months of 2015, compared to the
same period of 2014 due to a combined
effect of lower export volumes and values
mainly to Russia and the Middle East.
Meanwhile, earnings of sea food declined
69
by 36.2 percent to US$ 112.5 million in the

review period due to the decline such
exports to the EU countries. However,
earnings from coconuts and spices exports
increased by 1.8 percent to US$ 238.0

million and by 54.8 percent to US$ 249.3
million, respectively in the review period.
Chart 18 : Trade Balance and Exchange Rate Movements
25,000
140
20,000
137
Rs./US$
10,000
5,000
131
Exports
Imports
Oct
Jul
Apr
2015 Jan
Oct
Jul
Apr
2014 Jan
Oct
Jul
Apr
125
2013 Jan
-15,000
2015 Jan-Aug
-10,000
2014 Jan-Aug
2014
2013
2012
Trade Balance
In terms of industrial exports, export

earnings from textiles and garments,
which accounted for 45 percent of total
exports, declined by 1.1 percent to US$
3,219 million reflecting a drop in exports
to the EU countries. Meanwhile, exports
earnings from rubber products dropped
by 12.4 percent to US$ 525 million due to
the decline rubber tyres exports. Earnings
from transport equipment significantly

declined by 123.2 percent to US$ 220
million mainly reflecting the base effect
due to the exports of a cruise ship in 2014.
Export earnings from gem, diamond and
jewellery, machinery and mechanical
appliances declined whereas export
earnings from petroleum products
increased in the reference period.
Chart 19 : Composition of Exports

12,000
8,000
6,000
4,000
2,000
Industrial
Mineral
2015 Jan-Aug
Agriculture
2014 Jan-Aug
2013
0
2012
US$ Million.
10,000
2014
-5,000
134
128
0
2011
US$ Mn.
15,000
70
Imports
Import expenditure increased by US$ 4
million to US$ 12,559 million in the first
eight months of 2015, compared to the
same period of 2014 mainly due to the
89.9 percent significant increase in
imports of the motor vehicles for personal
usage to US$ 905 million and a 12.9
percent expansion of food and beverages
imports to US$ 1,124 million coupled with
increased transport equipment by 117.7
percent to US$ 676 million emanating
from the increase expenditure on autotrishaw and tractors in the reference
period. However, expenditure on fuel
significantly dropped by 48.1 percent to
US$ 1,789 million due to the plunge in
international oil prices whereas import

expenditure on textile and textile articles
marginally increased by 5.3 percent to
US$ 1,547 million due to the moderate
demand arising from the EU countries for
textiles and garments in the review
period. During the reference period,
import expenditure on cereals, medical
and pharmaceutical items, chemical
products, plastic, rubber, machinery and
equipment increased whereas imports
expenditure on sugar, dairy products,
wheat and maize declined. The main
import destinations for Sri Lanka were
India, China, Japan, the USA and
Singapore contributing to 61 percent of
total imports.
Chart 20 : Composition of Imports

20,000
15,000
10,000
5,000
2015 Jan-Aug
2014
2013
Intermediate Goods
2014 Jan-Aug
Consumer Goods
2012
0
2011
US$ Million.
25,000
Investment Goods
71
Table 33 : External Trade

(US$ Million)
Category
2012
2013
2014
Exports
9,774
10,394
2,332
1,412
Jan. - Aug.
2014
2015 (a)
11,130
7,399
7,147
2,581
2,794
1,848
1,668
1,542
1,628
1,083
901
920
1,039
1,166
765
767
7,371
7,749
8,262
5,492
5,446
3,991
4,508
4,930
3,256
3,219
Food, Beverages and Tobacco
284
235
289
195
174
Rubber Products
Machinery and Mechanical
Appliances
Petroleum Products
859
888
890
599
525
297
312
343
225
197
Agricultural Exports
Tea
Other Agricultural Products
Industrial Exports
Textile and Garments
463
428
338
238
289
1,477
1,378
1,472
980
1,042
Mineral Exports
61
52
59
50
22
Unclassified
10
12
15
10
19,190
18,002
19,417
12,555
12,559
Other Industrial Exports
Imports
Consumer Goods
2,995
3,182
3,854
2,288
3,142
Food and Beverages
1,304
1,368
1,634
996
1,124
Other Consumer Goods
1,691
1,814
2,220
1,293
2,018
11,578
10,554
11,398
7,739
6,397
Petroleum
5,045
4,308
4,597
3,449
1,789
Textiles and Garments
2,266
2,046
2,328
1,470
1,547
Intermediate Goods
Wheat and Maize
364
323
405
268
214
3,903
3,877
4,068
2,553
2,847
4,590
4,253
4,152
2,519
3,007
Machinery and Equipment
2,356
2,222
2,131
1,369
1,483
Building Material
1,237
1,357
1,309
837
845
992
668
707
311
676
28
14
14
12
-9,416
-7,608
-8,287
-5,156
-5,412
Other
Investment Goods
Transport Equipment
Other
Unclassified
Trade Deficit
(a) Provisional
Earnings from Tourism and Workers

Remittances
Earnings from tourism rose by 17.1
percent to US$ 1,866 million and workers
remittances increased marginally by 1.8
percent to US$ 4,598 million in the

reference period. The robust growth in
tourist arrival continued in the reference
period with 1.2 million tourist arrivals
(1,172,465 tourists), a growth of 17.1
percent over the same period of 2014.
72
Workers remittances, which is a stable

source of foreign exchange earnings of Sri
Lanka, reached US$ 4,598 million with a
growth of 1.8 percent over the same
period of 2014. The remittances helped
meet 36.6 percent of total import
expenditure.
The
government
has
identified the importance of sending
skilled labour by providing skillenhancement, training and seeking high
wage earning foreign employment
opportunities.
8,000
300,000
7,000
7,000
250,000
6,000
6,000
5,000
5,000
4,000
3,000
100,000
2,000
2,000
50,000
1,000
1,000
Professional
Clerical and Related
Semi Skilled
Middle Level
Skilled
Unskilled
Middle East
Europe
Asia
America
Australia and New Zealand
Other
2014
2013
2012
2000
2011
2014
2013
2012
2011
2010
2009
2008
2007
2010
2009
3,000
2008
4,000
150,000
2007
200,000
US $ Mn
8,000
US$ Mn
350,000
2000
Number of Employees
Chart 21: Workers Remittances by Amount, Type of Employment and Originating Country
73
6. GLOBAL ECONOMIC TRENDS

6.1 World Economic Growth5
The growth prospects for 2015 remain
moderate and uneven across borders.
World economic growth is anticipated at
3.1 percent for 2015 and 3.6 percent for
2016,according to the forecasts in the
October 2015 World Economic Outlook
(WEO)
Update,
the
International
Monetary Fund (IMF). The projection for
2015 is 0.3 percentage point below the
growth achieved in 2014 stemming
mainly from the moderate recovery in
advanced economies, such as the United
States (US) and the United Kingdom (UK),
increased financial market volatility
following the depreciation of the Chinese
Renminbi, the plunge in commodity
prices and declining capital flows to the
emerging and developing countries
coupled with geo-political instability
particularly, in Russia and the Middle
East.
Advanced economies are expected to
grow at 2.0 percent in 2015 and 2.2
percent in 2016, compared to growth of
1.8 percent recorded in 2014, reflecting
recovery in the US, expanded economy in
Japan and the Euro economies. However,
advanced economies with commodity
exporters, such as Australia, Canada and
Norway are in severe trade deficit.
Meanwhile, the growth in emerging and
developing countries is expected to slow
down to 4.0 percent in 2015, compared to
4.6 percent in 2014, while the growth for
2016 is projected to reach 4.5 percent.
Chinas economic growth is expected to
slow down to 6.8 percent in 2015 whereas
5
This chapter is based on various reports such as the

World Economic Outlook (October 2015) and Fiscal
Monitor (October 2015) published by IMF
Indias growth is projected to expand by

7.3 percent in 2015.
Meanwhile, growth in the Philippines,
Thailand and Vietnam is projected to pick
up this year. However, growth in
Malaysia and Thailand is expected to slow
down. This mixed performance in the
ASEAN-5 economies is a combined effect
of a moderate growth in China, a
slowdown in oil exporting countries and
the decline in the commodity prices of
such products exporting countries.
Growth in low-income countries, which is
expected to decline to 4.8 per cent in 2015,
in comparison to 6.0 percent achieved in
2014, was adversely affected by the drop
in commodity prices, moderate growth in
the world economy coupled with global
financial turmoil. Amidst the slowdown,
growth prospects in 2016 is positive,
benefiting from growth forecasts for
emerging and developing countries, with
increased expected growth in Latin
America, Russia and the Middle East
followed by increased expectations for
China and India.
6.2 Inflation
Deflation remains a threat for advanced
economies and also some part of Asia,
reflecting the decline in fuel prices and
other commodities, such as steel and iron
ore. Meanwhile, core inflation remains
unchanged during the first nine months of
2015, but was below Central Banks
targeted level of inflation. However,
inflation in advanced economies is
expected to increase in 2016. Food and oil
prices continued to exert downward
pressure on inflation in many emerging
market economies and inflation is
74
expected to be 4.2 percent in 2015 in such

countries, compared to 4.5 percent in 2014
except Venezuela and Ukraine.
In the Euro economies, inflation is
expected to record 0.2 percent in 2015 and
increase to 1.0 percent in 2016 due to the
modest economic recovery. Meanwhile,
inflation in advanced countries is
expected to remain well below their
targets and emerging economies are
expected to record lower inflation.
Inflation in Japan is expected to rise
whereas the US inflation is anticipated a

decline to 0.1 percent as against 2 percent
expectation in the long-term. Chinas
inflation is projected to be 1.5 percent and
inflation in India is expected to decline,
benefiting from the fall in global oil and
commodity prices. In contrast, reflecting
the depreciation of respective currencies,
inflation in Russia and Turkey is expected
to rise to 16 percent and 7.5 percent,
respectively in 2015.
Table 34 : Key Indicators of World Economy - 2015 (Projection)

Country
Argentina
Australia
Brazil
Canada
Chile
China
France
Germany
Greece
India
Indonesia
Italy
Japan
Korea
Malaysia
Mexico
Russia
Singapore
South Africa
Spain
Sri Lanka
Thailand
United Kingdom
United States
Vietnam
GDP Growth
(Annual
percent
change)
0.4
2.4
-3.0
1.0
2.3
6.8
1.2
1.5
-2.3
7.3
4.7
0.8
0.6
2.7
4.7
2.3
-3.8
2.2
1.4
3.1
6.0
2.5
2.5
2.6
6.5
Inflation
(Percent)
Unemployment
(Percent)
16.8
1.8
8.9
1.0
4.4
1.5
0.1
0.2
-0.4
5.4
6.8
0.2
0.7
0.7
2.4
2.8
15.8
0.0
4.8
-0.3
1.7
-0.9
0.1
0.1
2.2
6.9
6.3
6.6
6.8
6.6
4.1
10.2
4.7
26.8
5.8
12.2
3.5
3.7
3.0
4.3
6.0
2.0
25.8
21.8
4.0
0.8
5.4
5.3
2.5
Fiscal
Deficit
(Percent of
GDP)
-4.9
-2.4
-7.7
-1.7
-3.3
-1.9
-3.8
0.5
-4.2
-7.2
-2.3
-2.7
-5.9
-0.5
-3.5
-4.0
-5.7
1.1
-4.1
-4.4
-5.6
-1.2
-4.2
-3.8
-6.9
Gross Debt
(Percent of
GDP)
52.1
36.0
69.9
90.4
18.1
43.2
97.1
70.7
196.9
65.3
26.5
133.1
245.9
38.2
55.6
52.0
20.4
98.7
48.4
98.6
71.6
43.5
88.9
104.9
61.2
Sources: World Economic Outlook, IMF, October 2015; Fiscal Monitor, IMF, October 2015;
Ministry of Finance and Central Bank of Sri Lanka
75
6.3 Fiscal Deficits

The average fiscal deficit to GDP ratio in
advanced economies is projected at 3.1
percent for 2015 and it will narrow down
to 2.6 percent in 2016, mainly due to the
plunge in oil prices and recent decline in
other food and non-food commodity
prices. There is a large fiscal space for
countries such as Germany and Hong
Kong China. However, in the Europe and
Central Asia regions, fiscal deficit is
expected to increase from 1.8 percent in
2014 to 2.2 percent in 2015. In emerging
and middle-income countries, fiscal space
is deteriorating to 4.1 percent in 2015 from
2.5 percent in 2014 due to the sharp
decline in commodity prices. The decline
on commodity prices helped to large
fluctuations in government revenue in
commodity exporting countries thereby
constraining public expenditure in such
countries. The fiscal deficit in oil
exporting countries, such as the Middle
East and North African region is projected
to widen to 8.3 percent of GDP in 2015 in
comparison to 5.7 percent of GDP in 2014.
Meanwhile, in low-income developing
countries, fiscal deficit is expected to
expand to 4.1 percent in 2015 from 3.2
percent in 2014, reflecting uncertainty in
the commodity market.
6.4 Government Debt
The gross government debt to GDP ratio
in advanced economies is projected to
average 105.2 percent in 2015 and 105.4
percent in 2016, in comparison to the 105.3
percent recorded in 2014. Low inflation
along with the decelerated growth
adversely affected debt dynamics in most
advanced economies. Gross government
debt ratio in emerging and middle income
countries has slightly increased since 2010
and it is projected to reach 44.6 percent in

2015 from 41.9 percent in 2014. In lowincome developing countries gross
government debt to GDP ratio is expected
to be 33.9 percent in 2015 from 34.8
percent in 2014 partly due to the domestic
currency depreciation of many countries.
6.5 Unemployment
The world unemployment remains high
due to lower economic growth,
particularly in advanced countries. In
2014, the global unemployment was 201
million people and is expected to increase
by 3 million in 2015 as per the World
Employment Social Outlook 2015 Report,
International Labour Organization (ILO).
The employment situation is improving in
advanced economies, such as the US and
Japan whereas it is deteriorating in
emerging and developing countries with
slower world economic growth coupled
with the drop in commodity prices and
financial market volatility. In September
2015, unemployment of the US was 5.1
percent whereas it was a high of11
percent in Euro area in August 2015. The
unemployment rate in China was 4.0
percent in the second quarter of 2015. The
youth unemployment in the world
increased to 21.4 percent at the end of
2014, reflecting difficulties to attain in
labour market for young people. The
number of unemployed are expected to
rise more than 212 million in 2019 as per
the ILO.
6.6 Interest Rates
The London interbank offered rate
(LIBOR) on six months US$ deposits is
expected to average 0.4 percent in 2015
and 1.2 percent in 2016. The respective
three-month euro deposits rates are
76
expected to average 0.0 percent in 2015

and 2016. The respective six-month yen
deposits rates are expected to average 0.1
percent in 2015 and 2016.
With the financial turmoil particularly
spread in the first half of 2015, a
slowdown in China, lower equity prices
and significant declined in commodity
prices followed by currency depreciation
in emerging and developing markets were
associated with the movements of interest
rate. Long-term sovereign bond yield
rates were up by 30 basis points in the US,
compared to the level of April and bond
yields increased by 45-80 basis points in
the Euro economies in the same period,
reflecting
recovering
of
economic
activities
and
increased
inflation.
Meanwhile, the US and the UK are in the
process of increasing their policy interest
rates whereas other countries, such as
Australia, Canada and New Zealand
reduced interest rates. In contrast to the
relaxed monetary policy stance adopted
by the most advanced economies,
emerging and developing economies are
in the process of tightening their
monetary policy. Meanwhile, nominal
interest rates were reduced in China,
India and Russia.
6.7 World Trade
World trade continued to remain
moderated in 2015 as witnessed in 2013
and 2014, as per the IMF October 2015
forecast. Global trade volume is expected
to decline by 3.0 percent, compared to 3.1
percent increase in 2014, reflecting
declined exports by 3.1 percent coupled
with increased imports by 4.0 percent in
terms of volume. However, trade volume
is expected to increase by 3.9 percent in
2016 with a pick up trade activities in
advanced economies. Growth in imports

in emerging economies is expected to
decline by 1.3 percent in 2015, compared
to 3.6 percent recorded in 2014, in volume,
due to slow down in domestic demand
and large exchange rate depreciation.
However, export growth is anticipated to
rise by 3.9 percent in 2015, compared to
2.9 percent achieved in 2014, reflecting
higher fuel exports from the Middle East
and increased domestic demand in
advanced economies. The trade deficit is
expected to expand in emerging
economies by 4.7 percent whereas the
trade surplus in advanced economies is
expected to increase by 1.6 percent in
2015, in terms of volume. World current
account deficit is expected to narrow in
2015, stemming from smaller surpluses in
oil exporting countries.
6.8 Commodity Prices
Commodity prices declined significantly
over the past three years affecting to
commodity exporters in terms of revenue
and foreign exchange earnings, while
benefiting commodity importers in terms
of improving persistent supply and
lowering cost. Oil prices declined further
in 2015 due to persistent supply and
weaker global demand; metal prices
dropped due to declined global demand
particularly from China and supply
improvements. Commodity prices fell by
21 percent in the first nine months of 2015
mainly driven by 24 percent drop in crude
oil prices, followed by the decline in
prices of metals and agricultural products
by 19 percent and 14 percent, respectively,
compared to the same period of 2014.
Strong supply from the Organization of
the Petroleum Exporting Countries
(OPEC), record level oil production in
Russia, Iranian nuclear program to
77
remove sanctions against Iran helped rise

the oil supply. Meanwhile, there is strong
demand for oil with 1.7 million barrels a
day. However, the demand is expected
slowdown with the concern over world
economic growth and financial turmoil.
Meanwhile, metal price also declined as a
result of oversupply, Chinas stock market
correction and currency depreciation.
Metal prices are expected to decline by 22
percent in 2015 and 9 percent in 2016.
Prices of agricultural commodities
showed mixed performance: the prices of
cereals and coffee increased whereas the
prices of cotton and cocoa (due to weaker
supply), tea prices (due to drought in
Kenya) increased in the second quarter of
2015. Food prices, such as cereals,
vegetable oils, wheat and soybeans are
projected to decline by 17 percent in 2015
and 5 percent for 2016. According to the
report on Commodity Market Monthly
IMF, in September 2015, although, prices
of all major commodities are expected to
decline in 2015 due to a weaker demand
coupled with increased inventories, oil
prices are expected to rise from US$ 52 a
barrel in 2015 to about US$ 55 a barrel in
2017. Food and metal prices are expected

to remain at lower level.
According to the recent report on
Commodity Market Monthly, IMF,
prices of energy items such as, petroleum,
natural gas and coal fell by 17.4 percent to
US$ 93.3 per barrel in the second quarter
of 2015 due to the plunge in crude oil
prices by 19.2 percent. The sharp fall in oil
prices stemming from continued geopolitical instability in Brazil, Russia, some
countries in Latin America and the
Middle East adversely affected the energy
markets. As a result, oil prices are
expected to average US$ 58.9 per barrel in
2015.
6.9 Capital Flows
Capital inflows and outflows to and from
advanced economies showed a pickup in
the first few months of 2015. However,
there has been a declining trend in capital
flows to emerging economies due to the
decrease inflows to China, India and Latin
America stemming from the global
financial turmoil.
78
BASIS USED FOR THE PREPARATION OF 2016 BUDGET ESTIMATES

Gross Domestic Product
The economy is expected to register a
growth rate of around 7- 8 percent in 2016
driven mainly by strong growth in
Services sector and potential recovery of
industry and agricultural output. The
Agriculture sector continues to grow
benefitting from the increase in
agricultural
production
particularly
stemming
from
continuation
of
governments fertilizer subsidy program
and favorable weather conditions. The
Industry sector is also expected to expand
in 2016, particularly with the enhanced
contribution coming from the factory
industry output with the increase in
demand emanating from both domestic
and
international
markets.
Implementation of several planned
infrastructure projects in the country is
likely to boost aggregate demand and
output. Meanwhile, the Services sector is
projected to expand on a higher growth
path with positive contributions coming
mainly from tourism, transportation,
financial services and external and
domestic trade. Private sector investment
is also expected to regain its momentum
in
2016
with
increased
investor
confidence.
Consumer Prices
Headline inflation is expected to remain
comfortably in low single digit level in
2016 and is anticipated to end around 3
percent. The supply side improvements in
domestic agricultural production through
government initiatives are expected to
impact favorably on price developments.
Moderate increased world economic
growth expected in 2016 is likely to exert a

slight pressure on commodity prices.
Employment and Unemployment
More employment opportunities are
expected to be generated through the
improved investor confidence, along with
the governments strategies towards
improved industrial production and
increased
public
investment.
The
emphasis placed on human resource and
skills development in a knowledge based
economy is also expected to create a better
skilled and productive labor force while
addressing skills shortage and skills
mismatch on the economy to supply
required skilled labor force for the startups. The unemployment rate is expected
to reduce around 4.0 percent of the total
labor force in 2016, benefitting from the
expansion
in
the
private
sector
investments and related improvements in
the economy.
Balance of Payments (BOP)
Sri Lankas external sector is expected to
strengthen in 2016, with an overall BoP
surplus and resultant increased Sri
Lankas external reserves. Exports are
expected to revive in 2016 around 16
percent (in US$ terms) with higher value
addition, export diversification and
expected recovery of the world economy.
The positive impact of the existing and
new Free Trade Agreements (FTAs), deep
regional economic integration and FTAs
with China and Japan are expected to
affect favorably Sri Lankas exports.
Imports are projected to grow around 20
percent in 2016, mainly due to higher
import
demand
particularly
for
79
intermediate and investment goods

arising from increased consumer demand
due to expected regain in domestic
economic activities. Even though the trade
deficit is expected to be widened,
envisaged improvements in services
account through enhanced tourism, ports
and airports related services etc., and
continuous improvement in inflows of
foreign workers remittances are expected
to ease and offset the deficit of the
external current account to a significant
extent. The current account deficit for
2015 is projected at 1.4 percent of GDP,
increasing marginally to 1.5 percent in
2016 as domestic investment picks up.
Workers remittances, which account for
more than 5 per cent of GDP, are expected
to generate around US$9.0 billion in 2016.
Renewed foreign investor confidence in
debt and equity investment would help
strengthen the capital account in 2016.
Expenditure
The basis for the preparation
expenditure estimates are as follows;
Expenditure on salaries and wages

is based on the assumption that
there will be about 1.3 million
employees in the public sector
while allowing a normal annual
increase in the salaries due to
annual increments entitled by
employees.
The number of pensioners is

assumed to be 580,000 in
estimating the expenditure on
pension payments with the partial
impact of about 25,000 retirees
who would retire in 2016.
There will be a lower increase in

interest payments given the
expected lower domestic interest
rates consequent to the anticipated
decline in inflation as well as
government
borrowing
requirement with the reduction of
the budget deficit less than 5.0
percent of GDP.
Expenditure on utility services and

supplies etc. is expected to be
strictly managed to meet medium
term fiscal targets.
Transfers
and
subsidies
to
households will be continued by
implementing
support
programmes for school children
and disabled soldiers. Social
security and welfare schemes for
needy people in the form of free
medicine,
poverty
alleviation
programme will be continued
together with agriculture support
Exchange Rate
A stable exchange rate would be
continued in 2016 while improving the
external reserves of the country.
Monetary Aggregates
Money supply would be maintained at a
level compatible with the expected
growth in the nominal GDP in 2016. The
envisaged fiscal consolidation in the
governments fiscal operations would
help allow sufficient resources to be
channeled to the private sector to achieve
the expected economic growth.
Revenue
Assumptions used for the revenue
estimates are given in Annex IV.
of
80
programmes, such as fertilizer

subsidy.
Transfers to public institutions and

corporations will be maintained at
a desired level while expecting a
strong improvement in their
performance.
financing needs of the Government are

met at least cost.
Sensitivities to the Estimates
Economic Projections could be sensitive to
the following challenges:
A faster recovery of the global

economy than envisaged leading
to an increase in international
energy and other commodities,
which could adversely affect the
import cost, domestic consumer
prices, production costs as well as
budget costs though it will also
generate positive implications,
such as enhanced exports
Adjustment costs to external

shocks
which
may
impact
domestic production, international
trade, domestic prices and overall
growth
Risks associated
disasters
To avoid duplication and smooth

functioning of utilization of
budgetary
provisions,
close
cooperation
and
monitoring
mechanisms
with
devolved
agencies and line ministries are
applied
when
implementing
development activities.
Unfavorable weather conditions

which could have an adverse
impact on agriculture, hydro
power generation and government
budget
Administrative and procurement

related impediments
Commitment Control mechanisms

will be implemented for fiscal and
cash flow management
Capacity constraints to the

medium term transformation may
affect the use of funds in relation
to foreign funded large projects
and thereby investment level and
economic growth.
Unexpected and sudden adverse

developments in global geopolitical conditions affecting world
economic growth
Public Investment in national,

regional
and
rural
level
development
programmes
to
develop both economic and social
infrastructure such as education,
health and vocational training, will
be continued at around 5-6 percent
of GDP to support the growth
momentum of the economy by
stimulating
private
sector
economic activities to reduce
poverty and regional economic
disparities.
Efforts to improve the quality of
public spending and curtailment
of unproductive expenditures will
be strengthened.
Borrowings
A proper combination of domestic and
foreign borrowings will be adopted to
ensure that the debt to GDP ratio would
continue to decline. The debt management
will continue effectively while ensuring
with
natural
81
Risks likely to have a material effect on

the fiscal position
Deterioration of global imbalances

resulting in a lower than expected
global economic growth which
could adversely affect external
demand for Sri Lankan goods and
services which will result in a
slowing down of the Sri Lankan
economy
Higher than expected petroleum

and
commodity
prices
in
international
markets
could
threaten
the
macroeconomic
stability and growth targets while
affecting government expenditure
and revenue
Increasing trend in public sector
employees salaries and pensions
related recurrent expenditure
Underperforming State Owned
Business Enterprises (SOBEs)
82
Annex I
Allocations Provided from the Budgetary Support Services and Contingent Liability Project 01 st
January to 30th September, 2015
Rs.
Head
No.
Ministry/
Department
His Excellency
the President
Office of the
Prime Minister
Public Service
Commission
Purpose
Personal emoluments , outstanding
payments of COSTI Project, winding up
activities of Secretariat for Special
Functions (Senior Ministers), purchase
of vehicles, improvement of the
buildings, expenditure of Office for
National Unity as per the Cabinet
Decision, expenditure of the Ministry of
Special Projects, custom duty for
importation of materials & equipment
for construction of Nagananda
International Institute for Buddhist
Studies at Biyagama, cost of
transportation of soldiers for special
humanitarian activities in Nepal,
Saemual Undong Project(KOICA),
foreign travelling, account the grant
given for National Nutritional
Secretariat by UNICEF, national
programme on drug prevention as per
the Cabinet decision, expenditure for
70th Summit of UNGA, 2015 in New
York and expenditure for newly created
Ministries of Public Enterprise
Development, Southern Development,
Mega polis & Western Development,
and Development Strategy &
International Trades.
Settlement for commitments for
electricity and water, supplies,
maintenance, services, buildings &
structures, rehabilitation of plant,
machinery and equipment, acquisition
of furniture & office equipment and Anti
-Corruption Committee, construction of
a building, purchase of vehicles, for
returning the funds given by European
Union for the Coordinating the Peace
Process in Sri Lanka as per the Cabinet
decision, personal emoluments and
leasing installments for leased vehicles.
Personal emoluments.
Recurrent
Capital
348,666,333
681,378,506
187,431,806
90,866,246
11,390,000
83
10
13
17
20
21
22
101
201
204
102
240
241
Administrative
Appeals
Tribunal
Commission to
Investigate
Allegations of
Bribery or
Corruption
Human Rights
Commission of
Sri Lanka
Office of the
Leader of the
House of
Parliament
Department of
Elections
Auditor General
's Department
Rent for the new office building,

personal emoluments and Services.
5,530,000
Acquisition of furniture & office
equipment, plant and machinery and
equipment and rent for new office
building, installation of CCTV Camera
System in Office Premises, personal
emoluments and supplies.
17,000,000
1,000,000
Expenditure for General Parliament
Election -2015 and personal
emoluments.
Payment of incentives and personal
emoluments.
Department of
Buddhist Affairs
Department of
Hindu Religious
& Cultural
Affairs
Ministry of
Finance
Department of
Public
Enterprises
22,450,000
Personal emoluments
Office of the
Parliamentary
Commissioner
for
Administration
Ministry of
Buddha Sasana
Department of
National Budget
58,700,000
2,319,000,000
302,000,000
1,740,000
State Wesak Festival 2015 as per the
Cabinet Decision.
21,070,000
73,180,577
Custom duty on importation of pooja

items
3,000,000
Purchase of a vehicle, payment due to
Priji Engineering Services (Pvt) Ltd as
per the Cabinet decision, personal
emoluments, travelling & services,
Interim allowances for Sri Lanka Social
Security Board,
Leasing for the vehicle purchased under
financial leasing method
Issuance of bonds in terms of
restructuring the NWSDB and Ceylon
Petroleum Corporation, personal
emoluments and foreign travelling.
26,315,318
5,664,000
1,300,000,000
6,500,000
38,900,000,000
84
242
243
245
246
247
248
249
250
251
280
296
324
103
Department of
Management
Services
Department of
Development
Finance
Department of
Public Finance
Department of
Inland Revenue
Department of
Customs
Department of
Excise
Department of
Treasury
Operations
Department of
State Accounts
Department of
Valuation
Department of
Project
Management
and Budget
Monitoring
Department of
Import and
Export Control
Department of
Management
Audit
Ministry of
Defence
4,000,000
Supply of seed paddy free of charge,
writing off the interest payment on
pawned jewelry in state banks, writing
off 50% of the capital cultivation loans
granted up to Rs.100,000/- by the state
banks, and increasing of interest rate
to15% for savings of senior Citizens, as
per the budget proposals in 2015.
2,550,000,000
300,000,000
5,000,000
Personal emoluments, rehabilitation
buildings and structures.
362,500,000
30,000,000
200,000,000
Personal emoluments and foreign
travelling.
Administrative fee of the EIB Credit
Line Project.
119,024,000
14,424,500
Improvements to existing Treasury
Accounting Information System.
Personal emoluments, conducting
Commonwealth Heads of Valuation
Agencies Conference in Colombo as per
the Cabinet decision.
6,000,000
59,000,000
9,000,000
9,500,000
3,000,000
Personal emoluments, Renovation of the
official residence of the Defence
Secretary, Colombo City Development
project and personal emoluments for Sir
John Kotelawala Defence University.
504,563,616
12,000,000
85
222
Sri Lanka Army
223
Sri Lanka Navy
320
Department of
Civil Security
325
Department of
Sri Lanka Coast
Guard
Ministry of
Policy Planning,
Economic
Affairs, Child,
Youth and
Cultural Affairs
104
401
State Minister
of Cultural
Affairs
Renting a new office Building as per the

Cabinet decision, traveling, supplies,
maintenance, services, rehabilitation and
improvement of capital assets,
acquisition of fixed assets, Prefabricated
Building Project, Army Hospital Project,
Intelligent Services and personal
emoluments and compensation for
disable solders.
Personal emoluments, Procuring two
Advanced Offshore Patrol Vessels and
relocation of Vidura Navy Training
Center.
Personal emoluments, Supplies,
maintenance, services, rehabilitation and
improvement of capital assets &
acquisition of fixed assets, stationery
and office requisites and transport.
Payment of taxes and duties for oil spill
response equipment
18,654,450,000
430,000,000
5,531,500,000
2,050,000,000
5,244,300,000
47,000,000
46,732,335
Settlement of leasing amount for 70
vehicles purchased by the Ministry of
Economic Development as per the
Cabinet decision, Preparation of
Western Region Mega polis Master Plan
as per the Cabinet decision , accounting
the grant given by UNICEF for the
projects of Conducting a study on
developing a comprehensive Social
Protection Scheme through Institute of
Policy Studies and project of Improve
Access to Safe Drinking Water in Areas
Vulnerable to Extensive Water Quality
Deterioration, repayment of deposits of
Golden Key Credit Card Company Ltd,
through CBSL as per the Cabinet
decision , payment of consultancy fee for
formulation of USA-Sri Lanka free
Trade Agreement as per the Cabinet
decision, payment for standing
committee and review committee
members, as per the Cabinet decision
and personal emoluments.
Building rent for official residence for
the Minister and personal emoluments.
604,905,611
741,396,214
126,500,000
86
402
State Minister of
Youth Affairs
403
State Minister of
Children's
Affairs
206
Department of
Cultural Affairs
Department of
Archaeology
Department of
National
Museums
Department of
Probation &
Childcare
Services
Department of
External
Resources
Department of
Census and
Statistics
Department of
National
Physical
Planning
Ministry of
Public Order and
Christian
Religious Affairs
207
208
217
239
252
311
106
225
226
Department of
Police
Department of
Immigration &
Emigration
Implementation of the Budget Proposal

2015 on Empowering the Youth
Parliament and building rent, account
the grant given for Youth Development
and Youth Empowerment Activities by
UNICEF and personal emoluments.
Accounting the grant given for the
projects of South Asia Initiatives to End
Violence Against Children by SAARC,
Ensuring Child Protection and Child
Rights by UNICEF and Training
Programme on ECCD Standards by
UNICEF. Lama Diriya Programme,
implementation of Nutritional Food
Package for Expectant Mothers Project
and Allowances for Pre-School Teachers
as per the Budget Proposals -2015,
building rent for the office building.
Domestic travelling and personal
emoluments.
39,134,000
250,217,903
1,043,000,000
28,902,637
63,090,000
161,000,000
27,000,000
43,700,000
12,000,000
151,000,000
26,000,000
Flood relief expenditure in Polonnaruwa
District and settling the outstanding bills
on providing the relief for victims of
flood/ landslide/ cyclone in December
2014
550,000,000
199,000,000
7,220,000,000
Personal emoluments and property loan
interest of public servants
82,630,000
87
227
304
108
308
221
Department of
Registration of
Person
Department of
Meteorology
Ministry of
Muslim
Religious Affairs
and posts
Department of
Posts
Department of
Labour
110
Ministry of
Justice and
Labour Relations
205
Department of
Public Trustee
Courts
Administration
Department of
Attorney
General's
228
229
230
232
234
220
112
Department of
Legal
Draftsman's
Department of
Prison
Department of
Registrar
Supreme Court
Department of
Ayurveda
Ministry of
Foreign Affairs
Personal emoluments and other capital

expenditure
79,300,000
15,000,000
32,280,000
4,000,000
Personal emoluments and property loan
interest of public servants
Accomplishment of pre-condition for
the project Payment of 30% from EPF",
continuation of office building
construction as per the Cabinet Decision
Accounting the grant given for Child
Protection Programme by UNICEF,
personal emoluments, payment of
compensation of employees who lost
employment in Thulhiriya and Pugoda
Textile Factories as per the Cabinet
Decision .
2,030,000,000
239,000,000
833,129,000
65,270,000
4,037,750
5,000,000
Electricity and personal emoluments.
892,019,000
Expenditure for Conference of the
Attorney Generals of Asia on the
occasion of the 130th Anniversary, Staff
training and personal emoluments.
126,746,000
5,500,000
14,600,000
Settlements of outstanding bills on
vehicle repair
288,187,800
25,500,000
299,667,000
Purchase flag cars for the use of Sri
Lanka High Commissioner in
Stockholm, Sweden, Geneva and official
vehicles for the use of Sri Lanka
Missions in Oslo, Jakarta, Kuala Lumpur
and Kampala, personal emoluments.
55,000,000
48,748,000
88
215
114
306
307
116
298
301
117
118
Department of
Technical
Education &
Training
Ministry of
Internal
Transport
Department of
Sri Lanka
Railways
Department of
Motor Traffic
Ministry of Food
Security
Department of
Measurement
Unit , standards
and Services
Department of
Co-operative
Development
Ministry of
Highways and
Investment
Promotion
Ministry of
Agriculture
285
Department of
Agriculture
289
Department of
Export
252,078,000
Payments of procurement of 80 nos. of
35-seater buses to use at remote villages,
as per the Cabinet decision and personal
emoluments including the staff of Sri
Lanka Transport Board.
1,011,100,000
253,000,000
5,000,000
Personal emoluments and issuing
number plates for registered vehicles
Purchase of paddy during Maha and
Yala seasons as per the Cabinet Decision
586,400,000
7,503,230,000
21,740,000
8,883,000
Road Network Development Project,
buildings & structures, land & lands
improvements, construction of
Highways Secretariat, construction of
Thattuthurai Bridge, Outer Circular
Highways Kadawatha to
Kerawalapitiya, Rural Road
Reawakening Programme as per the
Cabinet Decision and personal
emoluments.
Renovation of official residence of Hon.
Minister,Water Resources Development
Investment Programe, Personal
emoluments of National Food
Promotion Board and Water Resources
Board, personal emoluments & fuel
expenditure, transport allowances for Sri
Lanka Council for Agricultural Research
Policy, supplies & services.
Accounting the grant for Post-harvest
Management and Value Addition of
Fruits in Sri Lanka by SAARC and
personal emoluments.
58,000,000
4,335,000,000
168,371,510
202,000,000
510,544,000
10,000,000
116,760,000
89
120
121
254
256
258
261
262
263
Agriculture
Ministry of
Womens Affairs
Ministry of
Home Affairs
Department of
Registrar
General
District Secretary
-Gampaha
District
Secretariat,
Kandy
District Secretary
-Galle
District Secretary
-Matara
District Secretary
-Hambamtota
264
District Secretary
-Jaffna
265
District Secretary
-Mannar
268
District Secretary
-Kilinochchi
269
District Secretary
-Bstticaloa
Personal emoluments and empowering

widows & women headed households
as per the Cabinet Decision.
Settlement of outstanding liabilities
relating to implemented development
programmes by former Ministry of
Economic Development as per the
Cabinet Decision , personal emoluments
of Ceylon Fisheries Corporation as per
the Cabinet Decision, Deyata Kirula
Development Programme -2015 as per
the Cabinet decision , development
projects implemented by the District and
Divisional coordinating committees 2014 as per the Cabinet decision,
personal emoluments of National
Aquatic Resources Research &
Development Agency, National
Aquaculture Development Authority.
14,900,000
25,000,000
190,870,000
16,069,110,000
199,000,000
206,377,800
Personal emoluments and Expenditure
of state funeral ceremony of Late Asgiri
Mahanayake Thero
205,832,800
178,000,000
107,000,000
Renovation and improvements of
District Secretariat -Hambantota, as per
the Cabinet Decision, and corporation
due to difficulties Encountered by the
people in the Area closer to Weerakatiya
National School and personal
emoluments.
197,000,000
130,500,000
149,290,000
Write off the losses occurred in war
prevailed areas, as per the Cabinet
decision
Electricity and water
6,713,140
2,200,000
Personal emoluments and vehicles

maintenance
119,300,000
90
271
District Secretary
-Trincomalee
275
District Secretary
-Polonnaruwa
276
District Secretary
-Badulla
Personal emoluments, and Awaken

Polonnaruwa Presidential Programme
2016-2020 as per the Cabinet Decision.
Meeriyabedda Housing Programme
122
Ministry of Mass
Media &
Parliamentary
Affairs
Department of
Government
printer
Ministry of
Housing and
Samurdhi
211
123
309
310
331
124
Department of
Building
Department of
Government
Factory
Department of
Divineguma
Development
Ministry of
Social Services,
Welfare and
Livestock
Development
73,920,000
53,000,000
200,000,000
60,000,000
Personal emoluments, travelling,

supplies, maintenance & services
gratuity benefits for the personal staff of
Hon. Members of Parliament.
Personal emoluments and purchase of a
Vehicle
Accounting the grant given for Housing
Development Project by Kazakhstan,
Housing Development Project by
Baharain, refurbishing of the official
residence of Hon. Deputy Minister,
payroll costs increase due to
implemented Projects under budget
proposal by State Engineering
Corporation of Sri Lanka as per the
Cabinet decision , personal emoluments
& services, implementation Urgent and
Essential Repairs of Government
Housing Schemes -implemented by
CMA as per the Cabinet decision , rents
and local taxes.
93,000,000
132,000,000
5,500,000
313,000,000
281,140,000
38,300,000
14,400,000
Increase Samurdhi Relief, as per the
Cabinet Decision and personal
emoluments.
Assistance to Chronic Kidney Disease
Patients, personal Emoluments of the
staff of Saumyamoorthi Thondaman
Foundation, April to June of 2015.
accounting the grant given Diri Saviya
22,410,000,000
91
216
Department of
Social Services
Project by WB and UNICEF country

programme initial Support for Elderly
Over 70 Years, as per the Cabinet
decision ,travelling expenses ,Budget
Proposal 2015, Contribution to MILCO
for the supply of low price milk
products and increase of milk buying
prices from farmers and personal
emoluments.
5,203,650,340
28,802,000
57,200,000
292
126
Department of
Animal
Production and
Health
Ministry of
Education
86,000,000
personal emoluments and retirements
benefits.
5,491,708,000
213
214
408
Department of
Educational
Publications
University Grant
Commission
State Ministry of
Higher
Education
8,870,000
Increase of Mahapola & Bursary as per
the Cabinet decision, personal
emoluments of university Grants
Commission including 13 universities,
Postgraduate Institute of English , 05
Higher Educational Institutes &
Postgraduate Institute of Medicine.
Personal emoluments including
Relocating of Institute of TechnologyUniversity of Moratuwa as per the
Cabinet decision , including Vocational
Training Authority of Sri Lanka,
personal emoluments Sri Lanka
Institute of Advanced Technology
Education, Bhikku university of Sri
Lanka, Buddhist & pail University of Sri
Lanka and University of Vocational
Technology.
4,026,000,000
448,945,000
102,912,806
92
130
Ministry of
Public
Administration ,
Local
Government and
Democratic
Governance
236
Department of
Official
Languages
312
Western
Provincial
Council
313
Central
Provincial
Council
314
Southern
Provincial
Council
315
Northern
Provincial
Council
316
North Western
Provincial
Council
Purchase of machinery & equipment for

Local Government Institutions, Local
Economic Development ( GLED) Project
funded by UNDP , providing
infrastructure facilities to the Shingri-La
hotel project as per the Cabinet Decision
, personal emoluments, supplies,
services, expenditure of the newly
established State Ministry of Public
Administration and Democratic
Governance, maintenance of vehicles &
services, payment to the daughter of
Former President D.B. Wijetunga as per
the Cabinet decision , personal
emoluments of Official Language
Commission, including newly recruited
National Integration Coordinators,
149,610,000
1,655,000,000
18,200,000
Personal emoluments, accounting the
grant given for Transforming School
Education as the foundation of a
knowledge Hub by WB/AusAid.
Account the grant given by UNICEF for
Central Provincial Council UNICEF
Programme, personal emoluments,
account the grant funded by World
Bank /AusAid for Transforming School
knowledge Hub.
Personal emoluments, account the grant
funded by World Bank /Aus Aid for
Transforming School Education as the
foundation of a knowledge Hub.
Personal emoluments, Northern Road
Connectivity Project, accounting the
grant given Transforming School
knowledge Hub by WB and Aus Aid.
Personal emoluments and accounting
the grant given for Transforming School
knowledge Hub by WB and Aus Aid.
7,799,160,000
22,000,000
4,815,660,000
35,134,550
4,843,280,000
22,000,000
3,189,720,000
393,000,000
4,955,420,000
22,000,000
93
317
North Central
Provincial
Council
318
Uva Provincial
Council
319
Sabaragamuwa
Provincial
Council
321
Eastern
Provincial
Council
135
Ministry of
Plantation
Industries
293
Department of
Rubber
Development
219
Department of
Sports
Development
Department of
National
Zoological
Gardens
Department of
Irrigation
294
282
Accounting the grant given for North

Central Provincial Council by UNICEF,
personal emoluments, rehabilitation of
damaged water tanks, canals & school
building, accounting the grant given for
foundation of a knowledge Hub,
Economic Infrastructure - Northern
Road Connectivity Project
Accounting the grant given for Uva
Provincial Council by UNICEF and
foundation of a knowledge Hub.
Accounting the grant given by the
World Bank and Transforming School
knowledge Hub by WB and personal
emoluments.
Personal emoluments and accounting
the grant given by World Bank /Aus
Aid for Transforming School Education
as the foundation of a knowledge Hub.
Salaries and advance payments of
employees of Janatha Estate
Development Board , implementation of
Guaranteed price of Rs. 80/- per
kilogram of Green Tea Leaf, personal
emoluments of Sri Lanka Plantation
Corporation, Tea Research Institute,
Rubber Research Institute and Tea Small
Holdings Development Authority,
personal emoluments, supplies &
services and incentives for Darton field
Estate employees as per the Cabinet
decision
Establishment of Guaranteed price of Rs.
350/- per kilogram of Rubber, as per the
Cabinet decision and personal
emoluments.
2,607,280,000
704,624,347
3,170,510,000
37,251,600
3,410,430,000
22,000,000
3,464,400,000
23,000,000
5,624,736,000
882,500,000
2,317,750,000
22,331,000
58,625,000
863,343,000
94
145
149
297
299
153
286
287
288
327
160
Ministry of
Resettlement
,Reconstruction
and Hindu
Religious Affairs
Ministry of
Industry and
Commerce
Department of
the Registrar of
Companies
National
Intellectual
Property Office
of Sri Lanka
Ministry of
Lands
Department of
Land
Commissioner
General
Department of
Land Title
Settlement
Department of
Survey
Department of
Land Policy
Planning
Ministry of
Mahaweli
Development
and
Environment
Mine Risk Education Programme,

Supporting Demining for the Civilian
,renovation of roads in Valikamam area,
maintenance of welfare centers of Jaffna
and Trincomalee Districts, Mine Action
Programme Free Domestic power
supply for resettled families in the
Northern and Eastern provinces, as per
the Cabinet decision, personal
emoluments.
Personal emoluments of Lanka Salusala
Ltd, National Crafts Council, Consumer
Affairs Authority, Palmyrah
Development Board, and Valachchenai
Paper Mill as per the Cabinet decision
and payment of the balance
compensation for the retired employees
of Ceylon Ceramics Corporation, as per
the Cabinet decision.
98,298,000
216,520,182
65,182,000
120,544,339
9,500,000
Personal emoluments including the staff
of National Intellectual Property Office,
and property loan interest of public
servants.
Personal emoluments including the staff
of Kanthale Sugar Company Ltd.
8,313,500
17,973,672
60,375,000
78,500,000
Personal emoluments ,transport, postal
& communication and fuel.
584,500,000
51,947,480
Accounting the grant given for
strengthening national coordination
activities of Global Environment
Facility, Mainstreaming Biodiversity
Conservation & Sustainable Use for
Improved Human Nutrition & Well-
95
283
291
166
332
182
Department of
Forests
Department of
Coast
Conservation
and Coastal
Resource
Ministry of
Urban
Development,
Water Supply &
Drainage
Department of
National
Community
Water Supply
Ministry of
Foreign
Employment
being , E Waste management Project

& Mainstreaming Agro Biodiversity
Conservation and Use in Sri Lanka
Agro-Ecosystems for Livelihoods
and Adaptation to Climate Change,
National Biodiversity Strategic
Action Plan to support the
implementation of the Convention
on Biological Diversity, a
Mainstreaming Agro Biodiversity
Conservation and use Sri Lanka
Agro Ecosystems for Livelihoods
and adaptation to Climate Change,
personal emoluments of Marine
Environment Protection Authority,
postal and communication, personal
emoluments.
Cost of reforestation and personal
emoluments.
299,448,000
16,188,210
157,100,000
18,000,000
48,000,000
Jaffna Kilinochchi Water Supply &
Sanitation, Greater Colombo Water
& Waste Water Management
Investment Improvement
Programme, Trincomalee Integrated
Infrastructure Project , Greater
Colombo Waste Water Management
Project (GOSL/ADB) , Water Supply
and Sanitation Improvement Project
and concessions for Colombo City
dwellers.
Personal emoluments and vehicles
maintenance
400,000,000
9,108,000,000
20,000,000
Personal emoluments and travelling
Total
119,538,000
150,233,443,831
81,372,336,597
Source: Department of National Budget
96
Annex II
List of Guarantees Issued by the General Treasury up to 30.09.2015
Name of the Bank or Institution
Bank of Ceylon
Commercial Bank
DFCC Bank
Employees' Trust Fund Board
Hatton National Bank
Hongkong & Shanghai Banking
Co.Ltd.
Industrial And Commercial Bank of
China Limited
Japan International Corporation
Agency (JICA)
National Development Bank
People's Bank
Name of Institution
General Sir John Kotelawala Defence University
Mihin Lanka (Pvt)Ltd
National School of Business Management Limited
Paddy Marketing Board
Road Development Authority
State Development and Construction Corporation
STC General Trading Company Ltd.
Urban Development Authority
Ministry of Defence and Urban Development
National Water Supply & Drainage Board (NWSDB)
Lakdhanavi Ltd.
West Coast Power(Pvt)Ltd.
Ceylon Electricity Board - Broadlands Hydropower
Project
Airport & Aviation Services (Sri Lanka) Limited
General Sir John Kotelawala Defence University
Lakdhanavi Ltd.
Sri Lanka Land Reclamation & Development
Corporation
Urban Development Authority
Ceylon Petroleum Storage Terminals Ltd.
Ceylon Shipping Corporation Ltd'
Co-operative Whole Sale Establishment
Lanka Coal Company (Pvt) Ltd
People's Bank Pension Trust Fund
Sri Lanka Consumer Co-operative Societies
Federation Ltd.
State Trading (Co-operative Wholesale) Company
Ltd.
Total Amount
Source: Department of Treasury Operations
Amount
Guaranteed
(Rs.Mn)
129,069
835
399
8,600
11,496
3,137
42,357
400
460
19,250
2,000
1,930
7,210
1,000
2,900
1,329
2,992
3,550
1,349
28,262
21,859
9,999
34,864
3,874
8,353
28,916
2,992
1,239
1,031
53,155
3,500
2,770
21,870
93,217
5,779
11,473
157
5,000
1,000
2,325
5,000
18,669
50
32
648,405
97
Annex III
Macroeconomic Indicators
Quarterly Growth Rates of Key Sub-Sectors of Agriculture
Sector
Tea (Mn kg)
Growth %
Rubber (Mn kg)
Growth %
Coconuts (Mn nuts)
Growth %
Paddy Growth %
Fish (MT)
Growth %
Q1
73.9
-9.5
32.8
-1.1
680
6.6
-21.4
136,650
13.3
Q2
99.8
8.0
28.2
-3.7
717
12.6
-35.5
122,100
10.8
2014
Q3
81.9
10.1
19.6
-32
726
12.2
-30.0
138,180
-4.1
Q4
82.5
-9.9
17.9
-54.1
692
11.0
28.7
138,120
4.3
Annual
338.1
-0.6
98.5
-24.5
2,815
10.6
-16.1
535,050
4.3
2015 (a)
Q1
Q2
79.1
92.9
7.1
-6.8
28.9
21.5
-11.7
-23.9
690
767
1.5
6.9
28.7
65.7
131,500 124,500
-3.8
2.0

(a) Provisional
Growth Rates of Industrial Sector: 2013-2015 (%)

Description
Food, Beverages and Tobacco products
Textile, Wearing Apparel and Leather Related Products
Chemical Products and Basic Pharmaceutical Products
Rubber and Plastic Products
Non-metallic Mineral Products
Furniture
Overall Industrial Growth
2013
2014
8.2
8.5
-1.3
-7.0
5.6
4.1
1.6
1.9
1.8
-3
-4.9
20.0
1.2
2015 (a)
Q1
Q2
10.9
1.5
5.4
-5.9
14.5
3.5
-2.5
12.5
-6.6
-10.0
-2.0
13.6
0.7
2.0

(a) Provisional
98
Performance in Electricity Generation and Services Sector: 2014- 2015

2014
Category
Q1
Electricity Generation
Total Generation
(GWh)
(Excluding Self
Generation)
2,974
Growth Rate
1.0
Hydro(excluding
mini hydro)
641
Growth Rate
(49.1)
Thermal
(includes
Independent
Power Plants and
coal)
2,199
Growth Rate
45.5
Hydro: Thermal
Ratio
23:77
Reservoir Water
Level %(End
Period Average)
38.7
Port Services
Q2
Jul
3,090
3.9
1,085
7.9
482
(64.6)
339
(50.1)
2014
Jan Jul
2015
Projct
.
Q1
Q2
Jul
7,149
3.3
12,981
5.0
3,114
4.7
3,258
5.4
1,159
6.8
7,531
5.3
1,461
(55.7)
4,706
29.5
1,167
82.1
1,184
145.8
281
(17.0)
2,632
80.1
2015
Jan Jul
2,341
81.2
611
255.2
5,151
73.1
6,843
(20.3)
1,710
(22.2)
1,703
(27.3)
724
18.5
4,137
(19.7)
17:83
36:64
22:78
41:59
41:59
41:59
28:72
39:61
33.5
50.3
37.5
81.3
61.4
50.6
67.7
JulAug
JanAug
JulAug
JanAug
Total Cargo
Handled ('000
MT)
17,638
18,094 6,841
49,393
Growth Rate
11.0
8.3
19.4
12.0
Total Container
Handled ('000
TEUs)
1,151
1,204
441
3,240
Growth Rate
10.5
13.6
16.6
13.1
Telecommunications Services ( No. of Subscribers)
JanJun
Fixed Lines ('000)
2,696
2,696
2,696
Growth Rate
(4.9)
(3.7)
(3.7)
Cellular ('000)
Growth Rate
Total Fixed Lines
and Cellular
('000)
Growth Rate
Internet and
email ('000)
2015
76,650
3.0
18,478
4.8
18,83
7
4.1
6,842
-
51,04
7
3.3
5,130
4.5
1,255
9.1
1,249
3.7
470
6.7
3,438
6.1
2,692
(0.7)
2,710
0.5
JanJun
2,677
(0.7)
24,23
5
15.3
26,91
2
13.5
26,91
2
13.5
3,641
3,641
21,394
10.6
21,012
7.6
21,012
7.6
24,734
11.8
22,720
6.2
2,677
(0.7)
24,23
5
15.3
24,090
8.7
23,708
6.2
23,708
6.2
27,425
10.4
25,430
5.6
2,903
2,788
2,788
4,403
3,587
99
Export Performance in 2014-2015

2014
Item
Agricultural Products
Tea
Rubber
Coconut Products
Other Agricultural
Products
Industrial Products
Textile and Garments
Petroleum Products
Other Industrial
Products
Mineral Export
Other Exports
Total Exports
US $ Million
2015
Aug-Dec
Total
(b)
(b)
Jan-Jul
Aug-Dec
Total
Jan-Jul(a)
1,609
944
33
199
1,185
684
12
158
2,794
1,628
45
357
1,490
809
16
209
1,149
596
2
186
2,639
1,405
18
395
433
4,742
331
3,520
764
8,262
456
4,828
366
3,734
822
8,562
2,827
213
2,103
126
4,930
339
2,819
264
2,176
200
4,995
464
1,702
48
8
6,407
1,292
12
7
4,724
2,994
60
15
11,130
1,745
21
9
6,348
1,357
12
7
4,902
3,102
32
16
11,250

(a) Provisional
(b) Projections
Import Performance in 2014-2015

US$ Million
Item
Consumer Goods
Rice
Sugar
Other Food Products
Other Consumer Goods
Intermediate Goods
Fuel
Wheat and Maize
Fertilizer
Textile & Clothing
Other Intermediate Goods
Investment Goods
Other Imports
Total
Jan-Jul
2014
AugDec
Total
Jan-Jul
(a)
2015
Aug-Dec
(b)
Total
(b)
1,961
65
176
633
1,087
1,892
217
79
464
1,132
3,853
282
255
1,097
2,219
2,772
127
164
712
1,719
1,913
53
109
540
1,211
4,685
180
273
1,252
2,929
6,678
2,977
4,720
1,621
11,398
4,597
5,659
1,603
4,225
1,200
9,884
2,803
227
153
178
120
405
273
200
146
144
110
344
256
1,255
2,065
1,072
1,730
2,328
3,796
1,393
2,316
1,099
1,673
2,492
3,989
2,185
7
1,967
7
4,152
14
2,644
11
2,031
10
4,675
21
10,830
8,586
19,417
11,035
8,179
19,214

(a) Provisional
(b) Projections
100
Balance of Payments - 2015

US$ Million
2015
Item
Current Account Balance
Trade Balance
Exports
Imports
Services (net)
Receipts
Payments
Primary Income (net)
Receipts
Payments
Secondary Income (net)
Secondary income: credit
Secondary income: debit
Capital Account (net)
Capital account: credit
Capital account: debit
Current and Capital Account (net)
Financial Account (net)
Direct Investment: Assets
Direct Investment: Liabilities
Portfolio Investment: Assets
Debt securities
Portfolio Investment: Liabilities
Equity and investment fund shares
Debt securities
Financial Derivatives
Other Investment: Assets
Currency and deposits
Trade credits and advances
Other accounts receivable
Other Investment: Liabilities
Currency and deposits
Loans
Trade credits and advances
Other accounts payable
Special Drawing Rights (SDRs)
Reserve Assets
Net Errors and Omissions
Overall Balance
Q1 (a)
Q2 (a)
-391
-1915
2877
4792
583
1578
995
-505
35
541
1446
1684
237
10
14
4
-381
499
14
114
0
0
-479
20
-499
0
69
-15
-25
109
161
-12
605
-239
-193
0
-786
-118
-1017
-513
-2171
2538
4709
420
1409
989
-334
34
368
1571
1756
185
6
10
5
-508
115
14
164
0
0
631
-5
636
0
-84
-49
-30
-5
257
412
-96
-239
180
0
1008
393
-792
Annual
Projection
-1990
-7964
11250
19214
2011
6410
4400
-2261
224
2484
6224
n.a.
n.a.
6.8
n.a.
n.a.
-1992
1419
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
-903

(a) Provisional
101
International Reserves
Item
Total External Reserves
End 2014
Jul-2015
Aug-2015
10,476.2
9,884.0
8,431.4
n.a.
5.7
6.1
5.2
n.a.
7,495.3
8,208.0
6,808.5
6,466.7
5.0
5.1
4.2
3.9
Months of Imports
Gross Official Reserves
US$ Million
End 2013
Months of Imports
Government Foreign Currency Debt Outstanding

US$ Million.(a)
End Aug 2015
Items
Total Outstanding
Government Foreign Debt (b)
Dollar dominated Domestic Debt
Sri Lanka Development Bonds (SLDBs)
Foreign Currency Banking Units (FCBUs)
24,921.46
20,507.97
4,413.49
4,263.49
150.00

(a) 1 US$ = 133.6 LKR
(b) Excludes foreign holdings of T-bills & T-bonds
Outstanding Domestic Foreign Currency Debt of the Government
Outstanding
FCBUs
SLDBs
Receipts
FCBUs
SLDBs
Payments
FCBUs
SLDBs
End 2014
3134.26
150.00
2,984.26
881.50
150.00
731.50
721.00
150.00
571.00
US $ Million
End Aug 2015
4460.06
150.00
4,310.06
2211.37
50.00
2,161.37
885.57
50.00
835.57
102
Movements in Selected Exchange Rates (Against the US$)

Appreciation (+) / Depreciation (-)
Currency
End 2013 - End 2014
Sri Lanka Rupee
Indian Rupee
Bangladesh Taka
Parkistan Rupee
Singapore Dollar
Thailand Bhat
Taiwan Dollar
Indonesian Rupiah
Philippine Peso
Korean Won
Japanese Yen
-0.26
-2.31
-0.60
4.60
-4.09
-0.08
-5.88
-2.07
-0.83
-3.29
-12.08
End 2014 - Sep

2015
-2.53
-4.30
-0.01
-2.80
-6.47
-8.32
-2.47
-11.29
-4.35
-7.63
-1.51
Central Bank Holdings of Treasury Bills

End Period
Rs. Million.
Net of Repos
(Book value)
2007
2008
2009
2010
2011
2012
2013
2014
41.8
143.2
36.0
2.3
167.3
163.3
13.3
3.1
End Aug. 2015
170.5
103
Commercial Banks' Loans and Advances to the Private Sector -June 2015 (a)(b)
1. Agriculture & Fishing

o/w
Tea
Rubber
Coconut
Paddy
Vegetable, Fruit Cultivation and Minor Food Crops
Livestock and Dairy Farming
Fisheries
2. Industry
o/w
Construction
o/w
- Personal Housing including Purchasing/Construction/Repairs
- Staff Housing
Food and Beverages
Textiles and Apparel
Wood and Wood Products including Furniture
Paper and Paper Products
Chemical, Petroleum, Pharmaceutical, Healthcare and Rubber and Plastic
Products
Non-metallic Mineral Products
Basic Metal Products
Fabricated Metal Products, Machinery and Transport Equipment
Other Manufactured Products
3. Services
o/w
Tourism
Financial and Business Services
Transport
Communication and Information Technology
Printing and Publishing
Education
Health
Shipping, Aviation, Supply and Freight Forwarding
4.Personal Loans and Advances
o/w
Consumer Durables
Pawning
Credit Card
Personal Education
Personal Healthcare
5. Safety Net Scheme Related (e.g Samurdhi)
6. Total
Amount
(Rs.million)( c)
as a % of
Total
291,215
9.8
68,979
20,312
9,820
16,562
16,239
12,401
10,259
1,188,002
2.3
0.7
0.3
0.6
0.5
0.4
0.3
40.1
528,541
17.9
249,940
60,786
73,524
131,767
9,952
8,293
8.4
2.1
2.5
4.5
0.3
0.3
60,910
10,510
15,105
2.1
0.4
0.5
105,203
11,664
786,989
3.6
0.4
26.6
232,007
88,809
165,266
34,723
43,489
14,320
5,562
17,818
12,685
644,054
7.8
3.0
5.6
1.2
1.5
0.5
0.2
0.6
0.4
21.8
108,197
153,259
58,880
2,013
2,458
50,192
2,960,451
3.7
5.2
2.0
0.1
0.1
1.7
100.0
104
(a) Based on the Quarterly Survey of Commercial Banks' Loans and Advances to the Private Sector,which includes loans
and advances of both DBUs and OBUs of commercial banks.
(b) Includes loans, overdrafts, bills discounted and purchased and excludes cash items in the process of collection
(c) Provisional
Interest Rate Movements in 2014 - 2015

Interest Rate
Policy Rates of the Central Bank
Standing Deposit Facility Rate(SDFR)(a)
Standing Lending Facility Rate(SLFR)(b)
Weighted Average Call Money Rate (AWCMR)
Weighted Average OMO Auction Rate (Repo)
Weighted Average OMO Auction Rate (Reverse Repo)
Treasury Bill Rates
91-days
182-days
364 -days
Lending Rates
Average Weighted Prime Lending Rate(AWPR) (weekly)
Average Weighted Prime Lending Rate (AWPR) (monthly)
Average Weighted Lending Rate(AWLR)
Deposit Rates
Average Weighted Deposit Rate (AWDR)
Average Weighted Fixed Deposit Rate (AWFDR)
End Dec
2014
End
Mar
2015
End
June
2015
6.50
8.00
6.50
8.00
6.00
7.50
6.21
5.91(b)
6.72 (d)
6.64
6.13(c)
-
6.12
-
5.74
5..84
6.01
6.55
6.68
6.76
6.11
6.21
6.28
6.26
6.35
11.91
7.09
6.90
11.50
7.00
7.00
11.25
6.20
7.33
5.83
6.87
6.02
7.29

a) Repurchase Rate and Reverse Repurchase rate renamed as Standing Deposit Facilty Rate (SDFR) with effect from
02 January 2014
b) Last auction held on 26 December 2014.
c) Last auction held on 27 February 2015.
d) Last auction held at 27 March 2014
105
CCPI - Changes in Expenditure Values

Rupees
Change
Weight
Sep 2014
Sep -2015
Rupees
Contri. to
Change %
41.03
23,662.61
24,177.84
515.23
2.18
1.01
34.32
19,787.89
20,127.74
339.85
1.72
0.67
Bread and Cereals
7.87
4,917.38
4,772.00
-145.38
-2.96
-0.29
Meat and Meat Products
2.29
1,063.80
1,179.79
115.99
10.90
0.23
Fish and Sea Food
5.95
3,401.55
3,515.45
113.90
3.35
0.22
Milk, Cheese and Eggs
6.11
3,758.74
3,637.03
-121.71
-3.24
-0.24
Oils and Fats
1.15
712.54
710.21
-2.33
-0.33
0.00
Fruit
1.43
578.61
836.66
258.05
44.60
0.51
Vegetables
Sugar, Jam, Honey,
Chocolate and
Confectionary
5.65
2978.01
3,129.62
151.61
5.09
0.30
1.54
786.14
689.45
-96.69
-12.30
-0.19
Food Products n.e.c.
2.34
1,596.11
1,657.52
61.41
3.85
0.12
Non - Alcoholic Beverages
0.87
626.93
678.6
51.67
8.24
0.10
0.73
545.85
596.52
50.67
9.28
0.10
0.14
81.07
82.08
1.01
1.25
0.00
5.84
3247.79
3371.5
123.71
3.81
0.24
3.14
1510.47
1805.25
19.52
0.58
23.72
10,353.64
9,190.30
294.78
1,163.34
-11.24
-2.28
3.6
1520.76
1,691.30
170.54
11.21
0.33
3.16
2,414.73
2,820.25
405.52
16.79
0.80
12.26
6,845.20
6,284.76
-560.44
-8.19
-1.10
4.75
1249.11
1249.11
0.00
0.00
1.5
645.45
698.24
52.79
8.18
0.10
3.94
1,579.62
1,699.40
119.78
7.58
0.23
2.89
1197.65
1259.06
61.41
5.13
0.12
100.00
50,979.23
50,875.51
-103.72
-0.20
-0.20
Food and Non Alcoholic

Beverages
Food
Coffee, Tea and Cocoa

Mineral Waters, Soft
Drinks, Fruit and Vegetable
juices
Meals Bought from out side
Clothing and Footwear
Housing, Water, Electricity,
Gas and other Fuels
Furnishing, Household
Equipment and Routine
Household Maintenance
Health
Transport
Communication
Recreation and Culture
Education
Miscellaneous Goods and
Services
All Items
106
Annex IV
Assumptions for Revenue Estimates
2016
The revenue estimates for 2016 are based
on
the
expected
macroeconomic
development and the status of the
countrys tax system in which broad
assumptions are as follows.
The economy is expected to grow by

about 7-8 percent in 2016 and the growth
is expected to be broad based.
The inflation is expected to remain

subdued at around 3-4 percent in
2016.
The recovery of the global
economy is expected to be
strengthened.
The external sector is expected to
improve further in 2016 by
maintaining a surplus in the
Balance of Payments. (BOP)
Growth in exports is expected to
continue with the enhanced
external demand while helping a
commensurate improvement in
domestic economic activities.
Imports are projected to record a
relatively high growth with
increased demand for investment
and intermediate goods by both
private and public sector to
support higher export growth and
economic growth.
A stable exchange rate is expected
to be continued, supported by the
enhanced external reserves of the

country.
Domestic demand is expected to
improve consequent to a strong
improvement
in
domestic
economic activities complemented
by the low interest rate regime.
The growth in the money supply
in 2016 is expected to maintain at a
level compatible with the expected
nominal growth of around 14
percent of GDP
Tax system is expected to continue
without significant changes to
existing tax rates. The gradual
establishment of the tax system in
the country will help to generate
expected revenue.
Automation of the Customs
clearing process (Single Window)
for both import and export will
help to enhance the customer
satisfaction and enhance the
revenue.
Automation of the Inland Revenue
Department
(IRD)
by
the
implementation
of
Revenue
Administration and Management
Information System (RAMIS) will
help to provide better service to
tax payer and enhance the
revenue.
Integrated Treasury Management
Information System (ITMIS) will
ensure efficient management of
government resources
107
Key Sectoral Growth Rate %

Item
2013
2014
GDP
Agriculture
Industry
Services
Inflation - GDP Deflator (%)
Unemployment Rate (%)
Private Investment (% of GDP)
3.4
3.2
4.1
3.7
6.2
4.4
20.5
4.5
-2.2
1.2
6.4
2.7
4.3
21.7
2015 up to
2ndquarter (a)
5.5
3.3
1.3
7.1
4.1
4.6
n.a

(a) Provisional
Value Added Tax (VAT)

Rate
Zero Rate
Standard Rate (11%)
Exemptions
Item
Export Goods
General Items
Goods and Services which are listed in the VAT exemption list of the VAT Act.
Value of Imports
Item
Rice
Sugar
Other Food
Other Consumable Goods
O/W Motor Vehicles
Fuel
Fertilizer
Wheat and Maize
Chemicals
Textiles&Textile Articles
Other Intermediate Goods
Machinery and Equipment
Transport Equipment
Building Materials
Other
Total
2014(a)
282
256
1,097
2,219
897
4,597
272
405
808
2,328
2,987
2,131
707
1,309
19
20,313
US$ Million.
2015(b)
180
273
1,252
2,929
1,276
2,803
256
344
880
2,492
3,109
2,282
1,112
1,275
27
20,490

(a) Provisional
(b) Projections
108
% of Total Imports
Category
2014(a)
2015(b)
Consumer Goods
19.8
24.1
Intermediate Goods
58.7
51.4
Investment Goods
21.4
24.3

(a) Provisional
(b) Projections
Custom Duty Structure (As at 06.11.2015)

Item
Basic raw materials and Machinery
Semi processed items ( Lowest level of production for domestic industry)
Intermediate products (medium level of production for domestic industry)
Finished products and Luxury goods
Rate
Zero
7.5%
15%
25%
Value of Imports and Growth

Item
Value of Imports (US & Mn.)
Growth
2014
19,417
7.9
2015(a)
19,214
-1.0
2016(a)
20,958
9.1

(a) Projection
Cigarettes Excise Duty Structure (Per 1,000 cigarettes as at 06.11.2015)

Item
Cigarettes each not exceeding 60mm. in length
Cigarettes each exceeding 60mm. but not exceeding 67mm in length
Cigarettes each exceeding 84mm. in length
Rs. per 1,000

6,975
12,675
14,660
23,750
27,240
Liquor Excise Duty Structure (As at 06.11.2015)

Item
Rs. per Proof Litre
109
Coconut Processed/ Molasses Arrack

Country Made Foreign Liquor
Molt Liquor (Beer) above 5% in strength (per liter)
Molt liquor (Beer) less 5% in strength (per lit.)
Wine containing more than 4% in strength
1,595
1,860
245
190
1,120
Petroleum Excise Duty Structure(As at 06.11.2015)

Item
Rs. per Proof

Rs per
Liter
Litre
Petrol
Rs.27.00
Diesel
Rs.3.00
Excise (Special Provisions) Duty: Motor Vehicles Duty Structure (As at 06.11.2015)
Item/ Engine Capacity
(i) Cars - Petrol
Less than 1000 cc
1000 cc - 1600 cc
1600 cc - 2000 cc
2000 cc - 3000cc
Exceeding 3000 cc
(ii) Cars - Diesel
Less than 1600 cc
1600 cc - 2000 cc
2000 cc - 2500 cc
Exceeding 2500 cc
(iii) Cars - Hybrid/ Petrol
Less than 1000 cc
1000 cc - 1600 cc
1600 cc - 2000 cc
2000 cc 3000cc
Exceeding 3000 cc
(iv) Cars - Hybrid/ Diesel
Less than 1600 cc
1600 cc - 2000 cc
2000 cc - 2500 cc
Exceeding 2500 cc
(v) Electric Cars
(vi) Vans
13 - 25 Persons/ Diesel
13 - 25 Persons/ Petrol
Less than 13 Persons/ Diesel
Less than 13 Persons/ Petrol
Rate
155%
173%
173%
230%
253%
230%
253%
276%
345%
58%
92%
92%
132%
184%
104%
104%
132%
184%
6%
98%
98%
230%
173%
Ports and Airports Development Levy(As at 06.11.2015)

Category
General Rate
Identified accessories, parts etc. for garments industry
Rate
5.0%
2.5%
110
Raw materials for manufacturing of Pharmaceuticals

Imports for Re-export
2.0%
Exempt
Receipt of Profits/ Profit Transfers and Dividends: 2014 2015

Rs.Million
2014
2015
2016
1. Bank of Ceylon
2. National Savings Bank
3. Peoples Bank
4. State Mortgage and Investment Bank
5. Regional Development Bank
6. Lanka Puthra Development Bank
7. National Development Bank
8. Telecommunications Regulatory Comm.
9. National Insurance Trust Fund
10. Sri Lanka Insurance Corporation Ltd.
11. Sri Lanka Telecom
12. Geological Survey & Mine Bureau
13. National Lotteries Board
14. Airport and Aviation Services (SL) Ltd.
15. Civil Aviation Authority
16. Board of Investment of Sri Lanka
17. Lanka Mineral Sands Ltd.
18. Lanka Electricity Company Ltd.
19. Independence Television Network
20. SL Rupavahini Corporation
6,846
4,060
6,316
10
36
6
10,000
4,000
2,001
759
650
500
250
100
43
25
125
2
Budget
8,346
3,060
5,158
10
34
10
15,000
3,000
2,000
800
850
50
250
200
150
30
50
150
-
Estimated
8,346
5,360
7,158
10
100
18
10
10,000
4,000
2,500
875
850
50
300
150
100
60
175
-
21. State Pharmaceutical Manufacturing Corp.

22. State Pharmaceuticals Corp.
23. State Timber Corp.
24. De La Rue Lanka Currency & Security Print
25. Lanka Industrial Estates
26. Lanka Phosphate Ltd.
27. Paranthan Chemicals Co Ltd.
28. Lanka Leyland Ltd.
29. Rakna Arakshaka Lanka Ltd.
30. Sri Lanka Convention Bureau
31. Ceylon Fertilizer Ltd.
32. Lanka Sugar Co.Ltd.
33. Pussellawa Plantation Ltd.
34. Kotagala Plantation Ltd.
35. Chilaw Plantation Ltd
36. Kurunagela Plantation
37. Kalubovitiyana Tea Factory
38. Namunukula Plantation
39. Elpitiya Plantation
40. Sri Lanka Export Credit Ins Corp
41. National Gem & Jewellery Authority
42. Insurance Board of Sri Lanka
43. Securities and Exchange Commission
44. Ceylon Petroleum Corporation
45. Sri Lanka Tourism Promotion Bureau
46. Others
Total Levy & Dividends
25
75
25
49
55
35
10
11
68
38
80
8
20
40
13
12
10,000
500
23
46,816
25
75
50
50
60
45
4
40
100
20
55
10
5
20
50
20
10
25
75
500
78
40,465
20
100
75
50
75
50
4
50
30
20
60
10
5
30
50
20
10
50
100
500
237
41,608
Institution
111
Source: Department of Public Enterprises and Department of Fiscal Policy
Rent Income
2014
Item
Rent on Government Buildings & Housing
Rent on Crown Forests
Rent from Land & Other
Lease Rental from Regional Plantation Companies
Others
Total Rent Income
642
739
44
733
3510
5,669
2015 Revised
Budget
700
1,100
50
1,000
200
3,050
Rs. Million.
2016 Estimate
750
1,800
60
1,200
300
4,110
Fees and Charges

Item
Service Charges by Government Press
Fees of Passport, Visas and Dual Citizenship
Examination & other Fees
Fees under the Motor Traffic Act & other Receipts
From others Various Sources
Total
2014
464
8151
229
8124
8088
25,056
2015 Revised
Budget
520
9,200
230
9,000
12,260
31,210
Rs. Million.
2016 Estimate
580
10,000
250
9,500
13,260
33,590
112

Fiscal Management Report 2016

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FISCAL MANAGEMENT REPORT 2016

20th NOVEMBER 2015