Introduction

The 2015 political transition created renewed opportunities for peacebuilding reconciliation and sustainable human development.

With a land area of 65,610 square kilometers and a population of 20.4 million, Sri Lanka has achieved a score of a 0.757, on the Human Development Index which puts the country in the “high human development” category and positioned it at 73 out of 188 countries and territories. Sri Lanka is going through intense demographic change and rapidly becoming an ageing middle-income country. It appears to be in its last stages of the “demographic dividend,” and is expected to reach its maximum numbers of working-age people soon after 2030. Sri Lanka’s population is expected to stabilize at 23 million by 2025. In addition to its traditional multi-ethnic composition, all of which is witnessing increased migration to the more developed Western Province, Sri Lanka is facing new migration waves of semi-skilled workers as well as small but increasing numbers of asylum seekers. Sri Lanka is currently working towards its national Vision 2030 where the Government is aiming to transform the nation into a high-income country, a services hub and a niche manufacturing destination within 15 years.

History

Sri Lanka has a recorded history of over 2,500 years with diplomatic ties and trade with other countries. For the most part, ancient Sri Lanka was ruled by kings with a self-sufficient village based economic system. The country boasts of irrigation works that compare with the most modern in terms of scientific construction and hospitals that pre-date the birth of western medicine. Sri Lanka was later colonized by the British, and remained so until gaining independence in 1948.

Economically, agriculture – in particular, paddy and chena cultivation – has been a dominant sector, and continues to be the main source of income for many. The plantation sector gained prominence towards the latter part of the 19^th century, with Sri Lanka known for its production and export of tea, rubber and cinnamon. The free market economy was introduced in the country in 1977

 Politically, Sri Lanka was the first country in South Asia to introduce adult suffrage in 1931. Sri Lanka has a multi-party system and is governed by a semi-presidential system, consisting of the Executive, Legislative and the Judiciary. The country is divided into nine provinces and 25 districts, with each district being administered under a District Secretariat. The districts are further subdivided into divisional secretariats and to Grama Niladhari divisions.

Nearly three decades of conflict in the Northern and Eastern provinces of Sri Lanka as well the tsunami that hit the Indian Ocean in December 2004 shaped much of the country’s modern history. Yet, despite the conflict, Sri Lanka’s GDP per capita grew on average by 4% per annum between 1990 and 2009. Even though the country witnessed a decline in GDP growth in 2009 (to 3.5%), the economy has picked up largely due to the cessation of the war, increased agricultural production in the Northern and Eastern Provinces, the growth of the tourism sector (60% increase in 2011 compared with 2010) and increased Government spending on reconstruction.  Sri Lanka’s GDP grew by 8% in 2010 and 8.3% in 2011, while it has grown between 6.7% and 7.2% in 2012.

At the start of 2016, the national unity government, consisting of the 2 largest political parties, continued to bring hope of major constitutional and reconciliation reforms. The “new” bipartisan government received considerable international attention, including support from the UN, for its broad state reforms agenda. 

Successes

The country remains in the high human development category, ranking 73/188 countries. Sri Lanka, a lower middle-income country, has been achieving economic growth averaging over 7% in the past 5 years, with a projected growth of 5.5% for 2017.

A notable policy reform has been the unanimous adoption of the Right to Information Act, which creates opportunities for increasing transparency, accountability and civic engagement. Whilst government has taken steps to implement the 2030 Sustainable Development Agenda, much remains to be done in streamlining mechanisms and processes, and ensuring they are localized and inclusive.   

Challenges

Livelihood opportunities for people in the previously conflict affected regions

Although Sri Lanka is on track towards achieving the MDGs, the country still faces many challenges.  It has persistent disparities across regions and between social groups. Therefore, improvements are necessary at the sub-national levels, otherwise, inequality will remain a major factor holding back continued human development.

The economy is fragile and faced with a precarious debt situation. Whilst the debt-to-GDP ratio reduced to 75%, debt repayment amounted to 95% of government revenue in 2015 , with domestic debt and foreign debt increasing by over 12% and 25% respectively. Further, Sri Lanka has one of the lowest tax-revenue to GDP ratios in the world. In June, the IMF approved a 3-year $1.5 billion loan as part of a structural reform package with further bilateral loans accepted.

However, low levels of public spending and poor quality services in health and education continue to undercut gains in human development. The national poverty headcount ratio reduced to 6.7% in 2013, as per latest estimates. Yet , roughly ¼ of the population can be defined as “nearly poor” and vulnerable to shocks that could push them back into poverty. Regional disparities are increasing, with “locational concentrations” of poverty in the former conflict areas in the North and East and Monaragala. Latest estimates show that in 2013, the poorest 10% received 1.4% of total household income, while the wealthiest 10% enjoyed 38.7% .

Whilst women have higher educational attainment than men, socio-cultural barriers have contributed to dismally low political representation – 5.8% of parliamentary seats in 2015; and a female labour force participation rate of 35.9%, which is less than ½ that of male participation at 74.7% . Youth unemployment (15-24 years) is high at 20.8%

The country has been adversely affected by recurrent natural hazards and extreme weather, and in 2016 alone, Cyclone Roanu and the long drought which followed exposed vulnerabilities such as high population densities in unplanned urban areas, poor management of water and other natural capital. The long-term impacts of climate change are projected to result in losses of 1.2% of GDP per year by 2050.