Fonseka, DamindaPinto, BrianPrasad, MonaRowe, Francis2013-01-022013-01-022012-09https://hdl.handle.net/10986/12040Following the cessation of hostilities in May 2009, the Government of Sri Lanka has announced a suitably ambitious macroeconomic vision to capitalize on the peace dividend. Its goals include growing at 8 percent or more per year and lowering government indebtedness from around 80 to 60 percent of GDP by 2015. This paper's main finding is that while some post-conflict bounce is only to be expected, sustaining high growth presents significant challenges. A substantial rise in the national investment and savings rates will be needed to sustain growth rates of 8 percent even when accompanied by a significant rise in total factor productivity growth. With the government's balance sheet constrained by its desire to lower public indebtedness, private investment will need to become the engine of growth. This places high priority on better infrastructure, clear signals about the relative roles of the public and private sectors, and hard budget constraints and competition both to strengthen the investment climate and spur technological upgrading in pursuit of faster productivity growth.en-USCC BY 3.0 IGOACCOUNTINGADVERSE EFFECTSAGRICULTUREALTERNATIVE INVESTMENTSBAILOUTBALANCE OF PAYMENTSBALANCE SHEETBANKING SYSTEMBASIS POINTSBOND SPREADBORROWING COSTSBUDGET CONSTRAINTSCAPITAL ACCOUNTCAPITAL ACCOUNTSCAPITAL GROWTHCAPITAL SHARECAPITAL STOCKCENTRAL BANKCLOSED ECONOMYCOMPARATIVE ADVANTAGECOMPETITIVENESSCONSUMERSCOST OF CAPITALCOUNTRY CREDITCOUNTRY RISKCREDIBILITYCREDIT HISTORYCREDIT RATINGCURRENCYCURRENT ACCOUNT DEFICITCURRENT ACCOUNT DEFICITSDEBT BURDENDEBT CRISISDEBT RATIODEBTSDEVELOPING COUNTRIESDEVELOPMENT ASSISTANCEDEVELOPMENT POLICYDEVELOPMENT STRATEGYDIMINISHING RETURNSDISBURSEMENTDISBURSEMENTSDIVESTMENTDIVIDENDDOLLAR DEBTDOMESTIC DEBTDOMESTIC INFLATIONDOMESTIC MARKETECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC LIBERALIZATIONECONOMIC REFORMECONOMIC RESEARCHECONOMIC THEORYELASTICITYEMERGING ECONOMIESEMERGING MARKETEMERGING MARKET COUNTRIESEMERGING MARKETSENABLING ENVIRONMENTENTERPRISE PERFORMANCEEXPENDITUREEXPENDITURESEXPORTERSEXPORTSEXTERNAL DEBTEXTERNAL INDEBTEDNESSEXTERNAL TRADEEXTERNALITIESFINANCIAL CRISISFINANCIAL INTEGRATIONFINANCIAL LIBERALIZATIONFINANCIAL SECTORFINANCIAL SECTOR LIBERALIZATIONFINANCIAL SYSTEMFISCAL BURDENFISCAL CONSOLIDATIONFISCAL DEFICITFISCAL DEFICITSFISCAL EFFORTFISCAL POLICYFIXED ASSETSFOREIGN BUYERSFOREIGN CURRENCYFOREIGN EXCHANGEFOREIGN EXCHANGE RESERVESFOREIGN INVESTMENTFOREIGN INVESTORSFOREIGN PORTFOLIO INVESTORSGDPGDP DEFLATORGDP PER CAPITAGLOBAL MARKETSGOOD GOVERNANCEGOVERNMENT BONDGOVERNMENT BORROWINGGOVERNMENT BUDGETGOVERNMENT DEBTGOVERNMENT DEBT MARKETGOVERNMENT GUARANTEESGOVERNMENT INDEBTEDNESSGOVERNMENT INVESTMENTGOVERNMENT POLICYGOVERNMENT REVENUESGOVERNMENT SAVINGGOVERNMENT SAVINGSGOVERNMENT SUBSIDIESGROWTH RATEGROWTH RATESHOLDINGHUMAN CAPITALHUMAN CAPITAL DEVELOPMENTINCOME TAXINCOME TAXESINFLATIONINFLATION RATESINFLATION TARGETINFLATION TAXINFRASTRUCTURE FINANCINGINSTRUMENTINSURANCEINSURANCE CORPORATIONINTEREST COSTSINTEREST RATE EFFECTINTERNATIONAL BANKINTERNATIONAL ECONOMICSINTERNATIONAL INVESTMENTINVENTORYINVESTMENT CLIMATEINVESTMENT DECISIONSINVESTMENT HORIZONSINVESTMENT RATEINVESTMENT SPENDINGINVESTORS IN GOVERNMENT SECURITIESISSUANCEJUDICIAL INSTITUTIONSLABOR MARKETLAND OWNERSHIPLEVEL PLAYING FIELDLIQUIDITYLOCAL CURRENCYMACROECONOMIC ENVIRONMENTMACROECONOMIC POLICYMACROECONOMIC UNCERTAINTYMACROECONOMICSMARGINAL PRODUCTMARKET EFFICIENCYNATIONAL INVESTMENTNATIONAL OUTPUTNATIONAL SAVINGNATIONAL SAVINGSNEW MARKETSNOMINAL INTEREST RATENOMINAL INTEREST RATESOPEN ECONOMYOUTPUT PER CAPITAPER CAPITA INCOMEPERSONAL INCOMEPOLITICAL STABILITYPORTFOLIOPOTENTIAL INVESTMENTSPRICE INCREASESPRIVATE CAPITALPRIVATE INVESTMENTPRIVATE INVESTORSPRIVATIZATIONPRODUCTION FUNCTIONPROFIT MARGINSPROPERTY RIGHTSPUBLIC DEBTPUBLIC FINANCESPUBLIC GOODPUBLIC INVESTMENTPUBLIC INVESTMENTSPUBLIC SAVINGPUBLIC SAVINGSPUBLIC SPENDINGRAPID GROWTHRATE OF RETURNREAL EXCHANGE RATEREAL EXCHANGE RATESREAL GDPREAL INTERESTREAL INTEREST RATEREAL INTEREST RATESRETURNRETURNSRISE IN INFLATIONRISK MANAGEMENTRISK PREMIUMSAVINGS RATESAVINGS RATESSHORT-TERM EXTERNAL DEBTSOCIAL DEVELOPMENTSOFT BUDGET CONSTRAINTSSOVEREIGN BONDSOVEREIGN RISKSTATE BANKSTAXTAX BREAKSTAX POLICYTAX RATESTAX REVENUESTOTAL DEBTTOTAL FACTOR PRODUCTIVITYTOTAL FACTOR PRODUCTIVITY GROWTHTOTAL OUTPUTTRADE REGIMETRADE TAXTRADE TAXESTRADINGTRANSACTIONS COSTSTRANSITION COUNTRIESTRANSITION ECONOMIESTURNOVERVALUE ADDEDWEALTHWorld Bank10.1596/1813-9450-6192