The land freed by arms is now being developed by the plough, stated President Mahinda Rajapaksa after receiving the Central Bank Annual Report 2009 as the Minister of Finance, at the Central Bank today (05 April).

This country received international recognition before six months elapsed from the end of war. Sri Lanka was identified as the best country to invest in and also became the best tourist destination. This is because of continuing development project even during the period of war, the President further stated.

Since 2006, over 6% of the income from Gross Domestic Products was spent on infrastructure development. When I took office in 2005, the Per Capita Income was just USD 1062 which had remained for almost 55 years. Now it is at USD 2053, a rapid growth in just 5 years, President Rajapaksa continued.

During times when the world faced the financial crisis, drought and food scarcity, I was told by so-called ‘experts’ that our economy will collapse. Yet, this did not happen. We are now on a successful journey, he added.

‘This is a victory of the entire nation, not a victory of an individual’, he stressed.

The CB Governor, Ajith Nivard Cabraal also presented the newly introduced first Rs.10/- coin to President Rajapaksa at the occasion.

The CB Annual Report 2009, details the state of the economy, the condition of the Central Bank, and a review of the policies and measures adopted by the Monetary Board within four months of the end of each financial year.

The report states that Sri Lanka’s economy demonstrated its resilience by growing at 3.5 per cent in 2009 amidst most challenging domestic and external conditions. ‘This remarkable performance was largely due to the steady recovery in the economy since the second quarter of the year, resulting in a notable growth of 6.2 per cent in the final quarter from a mere 1.6 per cent in the first quarter’.

A notable achievement in 2009 was the sharp deceleration in inflation, a result of the prudent monetary policy measures adopted by CBSL over the last few years and the significant decline in global commodity prices, the report states.

Inflation, which reached 28.2 per cent in June 2008, declined sharply to 4.8 per cent by end of 2009, recording an overall average rate of 3.4 per cent in 2009, the lowest since 1985.

The end to the prolonged internal conflict and the restoration of peace provide a greater optimism on economic prosperity providing a strong basis for long-term sustainable development, supported by appropriate policies, the report states.

In 2009, all major sectors of the economy contributed positively to economic growth.
Agriculture sector recorded a low growth of 3.2 per cent compared to a high growth of 7.5 per cent in 2008, mainly owing to the contraction in the output of tea and paddy. The output of the Industrial sector grew by 4.2 per cent in 2009. The growth in the Services sector was at 3.3 per cent in 2009.

External trade, which contracted in 2009 due to the impact of the global economic crisis, improved towards the latter part of the year, it further points out.

Foreign inflows to the government securities market increased during the second half of the year reversing the trend observed during the early part of 2009. Long-term foreign loan inflows to the private sector increased by 47 per cent to US dollars 390 million during the year.

The economy of Sri Lanka is expected to recover steadily and grow above the pre-crisis level in the medium term facilitated largely by the positive outlook brought about by the end to the conflict. A higher growth of 7-8 per cent is expected in the medium term, the report states.

GDP per capita for 2009 was estimated at Rs. 235,945, an increase of 8 per cent over the previous year’s Rs. 218,167, which surpasses the inflation rate (3.4 per cent). Per capita income reached the level of US dollars 2,053 in 2009, compared to US dollars 2,014 in the previous year indicating an overall improvement in living standards. In 2009 GDP at current market prices was estimated at Rs. 4,825 billion (US dollars 42 billion) registering an increase of 9.4 per cent. Reflecting the impact of the decline in consumption demand for imported goods, domestic savings expanded by 42.2 per cent as against the decline of 2.8 per cent in 2008, and reached Rs.870 billion in 2009.

The national savings ratio improved and stood at 23.9 per cent compared to 17.8 per cent in 2008.

Both the nominal and real wages of all three sectors, namely the public sector, formal private sector and informal private sector increased in 2009, compared to the previous year.

The rate of unemployment which had been declining over the past few years recording the lowest level in 2008, began to increase mainly due to the adverse impact of the global recession, on several sectors of the economy. Since the third quarter of 2009, however, the rate of unemployment started to decline indicating the resurgence of the economy with the ongoing economic activities and gradual recovery in the global economy.

The CCPI, the official consumer price index of the country, recorded a 4.8 per cent increase on an year-on-year basis and a 3.4 per cent increase on an annual average basis, the lowest end year annual average rate recorded for a period of more than two decades, the report further points out.


The Central Bank of Sri Lanka Annual Report 2009 is accessible at

http://www.cbsl.gov.lk/pics_n_docs/10_pub/_docs/efr/annual_report/ar2009e/ar09_content_2009_e.htm