Economic Development

Sri Lanka was ahead in its social and health indicators, but needed urgent attention in upgrading medical equipment and the distribution of resources across the country. President Kumaratunga’s vision for the sector therefore focused on the improvement of infrastructure facilities and modernization of equipment and the appointment of doctors and nurses to all hospitals across the island, providing them with sufficient financial incentive to encourage them to even serve in remote areas.

National Health Policy
In 1995 President Chandrika Kumaratunga formulated a Health Task Force to provide more efficient and effective quality health services to the people of Sri Lanka and to recommend necessary health policies and strategies to address the prevailing major health issues and meet the oncoming challenges in the implementation of such services.

Under the programme the Government improved one hospital in each district, to reduce inequities in the distribution of services and to provide high quality facilities to people living in the remote areas. Under this programme 34 hospitals were identified for phased development based on the under privileged situation in each district.

The hospital service was also expanded to areas of special need (e.g. the disabled, elderly, victims of the war and conflict, occupational health problems, mental health and estate health services) and also helped revitalize health programmes in schools.

The Government’s efforts in improving the sector also saw the Castle Street Hospital for Women win the National Productivity Gold Award for the service sector in 2003. Thereafter, De Soysa Hospital for Women, Lady Ridgeway Hospital for children, and District General Hospital, Ampara, were able to win awards as well.

The resulting outcome of the structured programmes saw significant improvement in the available resources in the health sector.

Number of Health Institutions and Hospital Beds, 1995-2004

Several district Hospitals were developed

Note: BH – Base hospital, DH – District hospital, GHC – Gramodaya Health Center

Women’s Health
Possibly for the first time in the history of Sri Lanka, women’s health was accepted as a key priority area and was incorporated into the Family Health services with the introduction of the concept of reproductive Health from 1996.

At the end of 2001, 377 well women clinics were functioning in the country, mostly based at MOH offices. These clinics provided screening services for women over 35 years of age against common non-communicable diseases. Of the 337 clinics established in 2001, 140 clinics provided Pap smear examination facilities.

Investment in roads and highways are vital in promoting inclusive growth and fostering regional and rural development. It opens up new markets and employment opportunities and labour mobility.

National level studies on poverty in the past have identified inaccessibility and the lack of good roads, as one of the determinants of poverty in Sri Lanka.

The road and highways development strategy of the Kumaratunga Government focused on consolidating resources devoted to the sector and streamlining efforts at building new and rehabilitating existing road networks.

The Government envisioned the development of an expressway network between high density corridors which would promote energy efficiency and rapid access to ports, marketing and growth centres estimating that by 2010, there would be 600 km of expressway on six new routes.

The Government also initiated a dedicated rural road development programme–‘MagaNeguma’ to provide better transport facilities to the rural people and speedy transport facilities for agricultural products to the markets by improving unclassified feeder roads.

Overall, the Government focused its efforts in implementing better and safer roads in Sri Lanka and improved and efficient transport system to spur economic growth in the long term, while keeping social and economic costs at a minimal.

Achievements of the CBK Presidency (upto Nov 2005)
Progress in the six planned expressway:
1. The 128 km Southern Expressway Project – Envisioned, funds formalized and approx. 60% completed by 2005

2. The 25 km Colombo- Katunayake Expressway Project – Approx. 60% completed by 2005

3. Colombo – Kandy Expressway – Planning, design and calling for tenders completed, also partially funded

4. Outer Circular Highway – Commenced

5. The Katunayake – Padeniya – Anuradhapura Expressway – Completed

6. The Colombo – Badulla Expressway –Completed

A well Planned Road Network to Expedite Socio – Economic Development
The Road Development Authority (RDA) which operated under the Ministry of Highways was responsible for development and maintenance of 11,661 Km of trunk roads (A – class) and main roads (B – class), besides 4429 bridges.

The public expenditure on rehabilitation of national roads increased from Rs. 4.221 million in 1994 to Rs. 19,706 million in 2005.

The Government carried out several special projects namely, the construction of the Marine Drive, rehabilitation of the Baseline road, and the Duplication road to reduce traffic congestion in Colombo city and the suburbs. Three flyovers were constructed at Ragama, Dematagoda and Pannipitiya at intersections of highways and railway lines, as a solution to the traffic congestion. In addition, initial action was taken to construct another three flyovers in Nugegoda, Gampaha and Orugodawatte.

The Government also understood the need for expressways for the provision of fast and efficient transport services between Colombo and other areas. As a first step, construction of the Southern Expressway was commenced, with an estimated cost of Rs. 29 billion.

To provide efficient transport services between Colombo and the Airport at Katunayake, action was initiated for the construction of the Colombo – Katunayake expressway. In addition to these two Expressways, the initial planning processes were completed for the construction of the Outer Circular Road and the Colombo – Kandy Expressway.

With the assistance of the Kuwait Government, 27 main bridges were reconstructed at a cost of Rs. 1, 400 million. In addition, the Government of Japan provided financial assistance to reconstruct 08 main bridges at a cost of Rs. 3,630 million. Among these were the Sri Lanka – Japan Friendship Bridge, the Gampola Bridge and the Muwagama Bridge.

Under the programme to widen and improve roads, the RatnapuraBalangoda Road was rehabilitated at a cost of Rs. 3,050 million. Further improvements on the Balangoda – Bandarawela road commenced in2004. In addition to these projects, the Government spent Rs. 12,479 million to improve and rehabilitate 663 Km of national roads.

For the development of rural areas, a special project titled ‘MagaNeguma’ was introduced in 2004. Under this programme 1247 Km of rural roads were rehabilitated at a cost of Rs. 80.5 million in 2004. The rehabilitation of another 1387 Km of rural roads costing Rs. 693.5 million was also planned during 2005.

The Shuttle Rail Bus Service between Colombo and Katunayake
It was envisaged to establish an electric rail service, between Ratmalana and Katunayake, as the access road to the Bandaranayake International Airport IBIA) along the Colombo – Puttalam road is traffic congested; the proposed shuttle service was to be of immense value.

With an aim to provide an efficient service to local and foreign tourists as well as enable the transporting of air cargo, reducing travel time by 2 hours, and a boon to the estimated 4 million annual passengers.

The project, which was at first to be confined to the BIA – Colombo section was estimated to cost Rs. 5,350 million.

This project was cancelled by the present Govt.

The Government has paid special attention to meet the increasing demand for housing, chinking water, health and sanitation by the urban population who represent 33% of the total population.

This was evident in the remarkable investment by the Government to expand and improve these facilities during the period 1994 to 2005.

The investment in Urban Development activities arose from Rs. 1,713 mln in 1994 to Rs. 2,706 mln in 2005, indicating a 58% growth.

The ThirasaraPurawaraHousing Scheme
● The Government’s vision of Sustainable Townships Programme was aimed at improving the living conditions of slum and shanty dwellers who constituted nearly 50% of Colombo population.

● Under this programme 671 housing units with all basic facilities were constructed in the Wanathamulla area at a cost of Rs. 550 mln. Housing project at Cyril C. Perera Mawatha, Colombo 13 and Baseline Road, Colombo 08 developed 230 and 130 housing units respectively.

● This programme was to be extended to other suburbs with the view of solving the problems faced by low income families which reside in under- served settlements.

Solution to the Housing Problem of Low-Income Families
● The National Housing Development Authority built nearly 326,110 housing units for low income families.

● The Government invested Rs. 8,406 mln for these programmes.

● The Housing Development Finance Corporation also provided housing loans amounting to Rs. 11,600 mln and nearly 71,500 families benefited. 53,000 families were from the low-income category.

Effective Solution to Public Employee Housing
● As the Government was concerned about housing of the public sector employees’ a housing project aimed at public sector employees was inaugurated at Edmonton Road, Kirulapone.

● This included 272 housing units and the associated cost was Rs. 457 mln. A second project with 352 housing units was also completed in Homagama at a cost of Rs. 950 mln. The Korean Government provided financial assistance to complete this project.

Regional Cities with Modern Facilities
● Several special urban development projects were implemented with foreign assistance, to upgrade and develop the major cities and townships throughout the country during this period.

● For this purpose, the Government invested Rs. 6,785 mln. The project activities included roads and highways,drinking water supply, sewerage systems, bus stands, shopping centers, and other related urban infrastructure facilities and amenities.

Development of the Colombo City
Under the sustainable Urban Development Programme, several projects were implements as part of transforming Colombo city as a model, modern city in Asia.

● The rehabilitation of the Beira Lake with the assistance of the World Bank commenced in 2002 and Rs 214 mln was spent on this project.

● It was well known that the Beira Lake was polluted due to thousands of illegal sewerage and waste water connections diverted to the lake. To overcome the issue, nearly 1,400 illegal connections were disconnected.

● The Greater Colombo Flood Control and Environmental Improvement Programme costing Rs. 4,872 was implemented. After the completion of the project, the floods threats in Dehiwela-Mount Lavinia Municipal area was eliminated.

● The Lunawa Environment and Improvement and Community Development Project was initiated in 2002. The objective of the project was to improve the environment and uplift the living conditions of the people in the Lunawa area.

● Nearly 18,000 families living within the Moratuwa, Dehiwela and Mount-Lavinia Municipal Council limits benefitted from this project. The project cost was estimated at Rs. 7,200 mln.

The CBK Government placed high priority on achieving a broad-based shift from low-value to high-value agriculture, accompanied by sustained improvements in productivity and competitiveness, which launched the agricultural sector into a significantly higher growth trajectory.

The main thrust of the policy was to strengthen the small and medium farmers who constituted 75% of paddy, vegetables and fruit production sectors, and well over 60% of tea, rubber and coconut production.

Rapid economic growth, underpinned by sustainable increases in agricultural output and productivity, directly benefited the poor and improved income distribution. This path led to sustainable agricultural development without sacrificing growth or structural change. Concerns about competition from imports and volatility in international markets were addressed using innovative and market-friendly solutions.

Policy and Strategies
In 1996 a New Agricultural Policy was formulated by a special Task Force under the guidance of Her Excellency the President. This was presented to the country at a massive rally of farmers in 1998, after which an Annual Action Plan was formulated in keeping with the Agricultural Policy document.

The Government identified that agricultural production required drastic changes in the next decade given the trends in population and preferences. To create an enabling environment for the commercialization of agriculture, the government implemented key institutional and policy reforms necessary for promoting increased private sector investment in agricultural production and processing. It also established a competitive trade policy, whilst paying attention to food security concerns at both the macro and micro level.

Furthermore, government provided development assistance in strategic areas, such as marketing infrastructure and market-driven research, extension, education and training.

In order to streamline the access to market for farmers, the Government also set up Economic Centres, which provided market infrastructure for small farmerproducts and created economic activities linked to agricultural products.

A number of economic centres were set up in Dambulla, Walpita, Keppetipola, Norochcholai and Hiriyala as primary centres while secondary centres were set in strategic locations like Embilipitiya, Ampara, Vavunia, Marassana, Kegalle, Pannegamuwa and NuwaraEliya.

From 2001, legislation pertaining to agriculture, including the Seed Act, Plant Quarantine Act and Agrarian Services Amendment Act were amended and implemented to further support the agriculture sector.

The Government also established the following institutions for implementing its Agriculture Policy:
● The Agrarian Marketing Authority to purchase, sell, supply and distribute paddy and other agricultural products.

● The Sri Lanka Export Development Board was expanded even further to act as a comprehensive facilitator to boost agricultural export.

● Kapruka Organization for coconut producers

● Tea Shakthi Organization for small and medium tea growers

Irrigation activities consumed an estimated 80 percent of Sri Lanka’s total water usage, raising the need to better manage the island’s water resources.

The CBK Government formulated a series of policies that would enable the agriculture sector, which was the main irrigation related industry, to use less water resources, while improving productivity.

The vision for the irrigation sector focused largely on helping farmers by increasing their access to modern efficient irrigation technologies and strengthening their managerial capacity. Emphasis was also placed on diversifying into high income yielding intensive agriculture based on the consolidation of the existing irrigation systems and the improvement of their drainage through salt water exclusion and flood protection schemes in the coastal belt of the island and ground water development.

One of the major issues affecting the irrigation sector is often described as a vicious cycle. This is brought on by the lack of maintenance, poor irrigation, farmer dissatisfaction, low rates of fee-collection and weak irrigation budgets which result in inadequate maintenance.

Breaking the vicious cycle, the Government introduced projects that combined physical up-gradation and management reforms, rehabilitation and system improvements, user participation and improved financial performance. The government also promoted the development of location-specific sustainable models of water conservation and storage (in tank) to maximize efficiency and the use of ground water received high priority.

The Government also emphasised the increase in crop per drop produced by irrigation if it was to meet the incremental demand for food. While large farms received support, the Government also identified the need to provide smallholders with access to affordable small plot irrigation as a critical first step in the creation of wealth for the rural poor.

The next step was to shift from subsistence to wealth creating, high-value, market-driven crops, with the objective of bringing under cultivation large areas of uncultivated land each year over a ten year period. New affordable irrigation technologies like low-cost drip irrigation systems were also introduced as a means to saving water and doubling irrigation productivity on small farms.

Meanwhile, the Government also envisaged that by 2010, irrigation would be an activity undertaken almost entirely by community groups, supported by effective social institutions, based on collective action and social capital. Local level control of irrigation schemes through people’s participation and the empowerment of social groups were identified as the key.

In line with this thinking, the Government introduced a range of reforms and new initiatives that aimed to improve existing structures and institutions, while introducing new technology and methodology to improve water usage and productivity.

The industrial policy of the Kumaratunga Government aimed to support the private sector in developing export-oriented industries with emphasis on the diversification of products and geographical locations.

The Government’s initiatives contributed to an annual average 7% growth rate of the sector during 1994 to 2005. Overall, the sectors accounted for 20 percent of GDP, with industrial exports accounting for about 70% of total export earnings.

The rapid growth also meant increased employment opportunities, with 22 percent of all new jobs during the period coming from the sector, employing a total of 978,000 by the end of 1999, an increase from 749,000 in 1992.

Strategy
The Government identified a number of thrust areas to develop the industrial sector and broad base the benefits of the sector across the island.

These included;
● Taking industries to rural areas
● Encouraging agro-processing gearedfor exports
● Backward integration,
● High value addition,
● Product diversification,
● Gaining competitiveness in the global markets
● Better working conditions.

The initiatives were also a means to increase investment in the industrial sector. Between 2000 and 2005 the sector investment grew over 100 percent, from Rs. 119 billion in 2000 to over Rs. 275 billion by 2005.

The largest ever investments in the services sector were made during the CBK Government such as Ports, Airport, Telecom, Power and Expressways.

Infrastructure development for industrialization
The Board of Investment (BOI) was empowered and restructured to be more industry and investment friendly.

The revitalized BOI helped reduce;
● The risks associated with investment
● The initial investment cost
● Improved the overall return on investment
● Consistently provided support services
● Corrupt practices were also eliminated

The BOI formulated policies to promote the efficiency and effectiveness of industries that actually benefited the economy in terms of income, technology transfers and employment generation. Good governance was used for managing and supervising investors, enabling them to proceed smoothly through the various stages of the investment process, from initial approval to construction and operation.

Liberalizing the financial sector
Banking and foreign capital regulations were revised to meet the changing industrial requirement and to increase investment. Equity holdings in the financial sector was also liberalised allowing for increased foreign equity.

The sectors were encouraged to improve standards to international levels, while also encouraging the debt, mortgage and equity markets. A simplification of the tax system and fiscal instruments, strengthening both the supervision and autonomy of the Central Bank of Sri Lanka were also undertaken.

Efficient labour for industries
Key components in the industrial development strategy of the Government were;
● The availability of a smooth and employment friendly labour market,
● Removal of regulatory barriers and counterproductive laws affecting investment, and the establishment of harmony between the employer and employee
● Easy access to land and property

Some of the measures adopted included;
● Productivity based incentives,
● Voluntary retirement schemes as a means of retrenchment
● Continuous human resource training

Natural resources for development Strategies were implemented to leverage Sri Lanka’s rich natural resources.The management of mineral resources was integrated into the overall development strategy. The Government also instilled best practices in mining of resources to ensure an environmentally, socially acceptable and sustainable process.

The Construction Industry A vibrant construction industry is a requisite for the expansion of infrastructure in highways, power, water, railways, irrigation, etc., stimulating economic growth and employment. The construction industry played a crucial role, not only in new constructions, but also in the systematic rehabilitation, maintenance and conservation of structures and buildings in order to ensure their effective use.

To ensure that high quality construction outputs were delivered on time conforming to environment safeguards and other safety norms legal, administrative and other impediments were eliminated. A closer dialogue was established with the Construction Forum to enhance the efficiency of the industry.

Building the base for a Knowledge -Based economy
Sri Lanka’s IT Sector grew significantly in response to several incentives offered by the Government, with the industry’s export earnings growing to US$ 55 million in 2000 from virtually zero in 1996.

● Nearly 80 new software development companies were set up generating a further 5000 direct employment.

● Supporting the growth in the IT Sector, the Government strengthened the IT education and training sector, approving the establishment of 75 IT training institutes with a capacity to train 10,000 persons annually, including 50 that were established in rural Sri Lanka.

● The Government also commenced work on three IT parks with the capacity to train over 3000 IT professionals annually. The entire university system was also networked, providing tertiary educational establishments the opportunity to share information seamlessly in real time.

● Further supporting the industry’s growth and development, the CBK government actively encouraged computer literacy by making all hardware imports duty-free.

Export Investment Zones
Upto 1994 only two zones – Katunayake and Biyagama were in place. The CBK Government initiated a large number of zones, setup in rural areas taking development and jobs to the villages.
These were Gampaha – 03
Kurugegala – 03
Kandy – 01
Galle – 01
Hambantota – 01

Several incentives including tax holidays land at low cost and labour regulations were introduced. Similar facilities were given to small and medium entrepreneurs and local industrialists.

During the period 1995-2004, an unprecedented decade of growth in the electricity sector was witnessed – 72 percent of households were connected to the national grid, up from 32%.

Sri Lanka’s total installed capacity also increased to 2304 MW in 2005 from 1409 MW in 1995, while demand increased from 3900 GW/h (1995) 6500 GW/h in 2005.

The state sector spearheaded investment in electricity generation projects completing several successful projects. Among these were;

● The construction of the Kukele Ganga Hydropower project injecting 70 MW to the national grid

● The Kelanitissa Combined Cycle Thermal Power Plant with installed capacity of 165 MW,

● A second thermal power plant at Kelanitissa with a capacity of 115 MW was installed on a Build Own Operate (BOO) and Build Own Transfer (BOT) basis.

● A total capacity of over 500 MW of privately generated power, including min-hydro plants, were installed and connected to the national grid.

The Government also promoted private sector participation in power generation for the first time.

The Government also drew up a long term electricity generation plan to fulfill future electricity demands. Major projects included the Upper Kothmale Hydro power plant and the Norochcholai Coal Power Plan.

The Kumaratunga Government formulated all plans, established funding and commenced work on both these projects. The two projects were estimated to add 1,000 MW of power to the national grid.

Both projects faced severe public opposition, which the Government successfully addressed with solutions that were accepted by the communities at both sites.

During 1995-2005, the Government also explored environmentally friendly renewable energy projects to move Sri Lanka away from heavy thermal dependence. A Wind Map was prepared to study the wind pattern in different parts of the country and to design feasible wind power projects. A pilot wind power project with an installed capacity of 3MW commenced operations.

The strategy to develop Sri Lanka as the leading Maritime and Aviation Centre in the Region with the most competitive and user friendly ports and airports was strategized early in the Kumaratunga Government. The vision was to provide high quality ports, shipping and aviation services and a regional Air-Sea Cargo Hub

Ports
As a first step, the Government adopted a sustainable and conducive policy environment to allow the government and private sector to work alongside in the development of the industry. The Government’s progressive policies also saw the private sector and the Government competing side by side for business, when the South Asia Gateway Terminal (a consortium comprising of P&O and conglomerate John Keells) was given a lease to build and operate part of the Colombo Harbour.

The vision also witnessed Sri Lanka’s ability to quickly adapt to global developments, rapidly modernising and improving its facilities to handle larger and wider vessels that were coming into play in the global shipping arena. The Government also introduced a ‘one-stop shop’ for documentation, propelling the Colombo Port on par with leading international ports.

Feasibility studies for regional port development was also initiated, with feasibility studies carried out to develop the Galle and Hambantota ports to provide bunkering facilities to the East West shipping lane, in theSouth of Sri Lanka.

The largest ever Port in Colombo, after Independence, took place through work done by the Kumaratunga Government.

Milestones included;
● Opening of Jaya Container Terminal in 1995 ● Deepening of Main Channel to 15M depth and Handling of the 1,000,000 Container TEUs

● Inauguration a new Oil Berth and Handling of the 1,500,000 container TEUs and Unity Container Terminal I

● Opening of the Oluvil Maritime Training center in the Eastern Province with work commenced forOluvil Port

● Colombo South harbor feasibility study

● Construction of third Berth in Galle Port; Feasibility study forPort of Galle Development ● North Pier Development phase II; One-Stop documentation Centre

● New Jetty in Port of Galle

● Completion of Stage of QEQ (SAGT) development project

● Inauguration of work for bunkering facilities at Port of Hambantotato develop and capture vast potential in the region

● Inauguration of the Ashraff Quay (multi-purpose alongside berth) in the Port of Trincomalee.

● Opening of SLPA Maritime Museum

● In 2004, the Port of Colombo crossed the 2.2 million TEUs marks, achieving an annual increase of 11%

Aviation
Despite the civil war at the time, Sri Lanka saw a rapid increase in passenger movement in its only International Airport at the time. The Government identified the need to increase the capacity and to modernise the airport in keeping with changing global standards.

The plan also sought to increase the safety and reliability of the airport in line with the increase in passenger traffic. The entire aero-bridge structure and passenger terminal expansion was accomplished by this government, while air cargo facilities were increased in keeping with increasing demand for air cargo services.

The Government also invested in modernising Sri Lanka’s air traffic control and to further improve on safety and more efficient management of its airways.

One of the most significant policy decisions of the Government was the privatisation of then ailing national carrier Air Lanka. Her Excellency’s perseverance against harsh criticism and controversy saw through the partial privatisation, enabling an otherwise failed airline to completely transform into a modern airline.

Under private management, the national carrier posted profits for the first time in the history of the airline and through significant modernization of its fleet out shone many regional and international carriers, winning numerous awards for its outstanding service.

During this period, the airline also successfully survived many trials including the LTTE attack in 2001 that severely crippled the airline.

Achievements
● Bandaranaike International Airport (BIA) Development Project – US$ 108 millionwhere all facilities were modernised

● A new pier with 8 boarding bridges was installed

● Development in Aviation witnessed airline laws regularized and simplified thus increasing air traffic

Increasing International Integration
Sri Lanka’s import and Export trade together account for around 78% of GDP. However, to increase growth of the export sector, the Government identified the need to make Sri Lanka more competitive.

A series of steps were taken;
● Ensuring the competitiveness of exporters through increasingly effective market, supporting institutions.

● Developing and diversifying the export sector with special emphasis on small and medium enterprises.

● Fostered a culture that led to the development of appropriate macro-economic conditions such as transfer of technology, skills development etc.

● Promoting value addition in export commodities such as tea, rubber, coconut and spices was also a key priority

● Promoting exports of high – value garments.

● Backward integration

● Reducing delivery time

● Reaching niche markets in the overall process of ensuring competitiveness.

● There was also a need to diversify Sri Lanka’s export base, both in terms of production and markets and increasing the volume of exports to destinations outside USA and Europe. The country’s geographic location was also considered with the Government investing in the development of physical and institutional infrastructure to promote Sri Lanka as a centre for trade services for marine traffic between the East and West.

● A Plan for developing Sri Lanka as an Air-Sea Cargo Hub were formulated while the development of the Colombo Port and airports were integral part of this plan.

● The Indo – Lanka Free Trade Agreement (FTA) – A landmark Free Trade Agreement between Sri Lanka and India was ratified in 2000, allowing Sri Lanka to export a wide range of its products in increased quantities.

● Indo-Sri Lankan trade rose 128% by 2004 and quadrupled by 2006, reaching $2.6 billion.

● An FTA with Pakistan was nearing completion. It has been signed by the present Government.

● Sri Lanka was accorded GSP+ status by the European Union in recognition of the Kumaratunga Government’s policies and programmes including transparency and granting of minority rights.

Numerous programmes were carried out by government and non-government organizations in order to alleviate poverty in Sri Lanka prior to 1994.

However, the CBK government was the first to identify this as a priority area and the need for a focused islandwide initiative. The Government therefore established a separate ministry to focus on the task of poverty alleviation and transferred the National Programme of Poverty Alleviation to the new ministry.

The National Poverty Reduction and Growth Strategy (NPRGS) of the Government was designed to navigate pro-poor pro-regional growth and income strategies. The main objectives of the NPRGS were:

● To create pro-poor growth to catalyze the poor to engage in productive economic activities using the DS Division as the micro level framework for poverty reduction.

● To satisfy basic human needs, reach/surpass Millennium Development Goals and achieve a holistic improvement in the quality of life of the poor.

● To minimize the sharp regional variations and disparities in terms of wealth creation and poverty.

● To help the poor to understand the causes of their poverty, identify their needs and potentials and match needs with resources.

● To reform and synergize the existing poverty alleviation programmes and projects.

The emphasis was centered on Divisional Secretaries Division for pro-poor economic growth. A mechanism in which the majority of communities participated in decision making and planning to improve their economic and social status.

The SamurdhiProgramme
This was an innovative and unique project envisioned for poverty alleviation.

The main aim of the process was to help Sri Lanka’s less fortunate develop socially and become economically strong and to contribute to national development.

40% of the total number of families in Sri Lanka received Samurdhi grants and a large number of these beneficiaries were lifted out of poverty, managing their own small and medium projects.

The Samurdhi Authority
The Authority was created to implement the SamurdhiProgramme. It established with the vision to make ‘A prosperous Sri Lanka where poverty is at a minimum.’

The Government sought to implement this vision by identifying the untapped capabilities of the low income earners and enhance their productivity through participatory development.

Some of the key tasks of the Authority were to broaden the opportunities for income enhancement and employment, help integrate them into economic and social development activities, to plan projects and schemes for the welfare and upliftment of low income groups and mobilize their participation in the planning and management of projects and schemes for their well-being.

The Programmes also sought to foster cooperation among the impoverished groups, promoting savings amongst them and assisting/helping them to obtain credit facilities,through a wide network of Samurdhi Banks which were formed under this programme.

The Government also identified the need to provide access to the services of Government Department, State Corporations, Local Authorities, private sector organizations and Non-Governmental Organizations that would aid the process of poverty alleviation.

It accorded monetary benefits to 1.8 million poor families. However, the Government envisioned the monetary grants not as handouts but astemporary financial assistance to uplift the families from poverty, while promoting and training the beneficiaries to commence new income earning activities as well as improve their existing activities.

● 30,000 educated youth were employed as Samudhrhi officers for the purpose of implementing Samurdhiprogramme among the rural families.

● The SurathuraDiriyaProgramme – credit on easy terms was granted to a large number of unemployed youth to commence small and medium enterprises.

● By the end of 2005 approximately 500,000 new enterprises had commenced under this programme.

● This programme provided a strong rural support base for the CBK government as well as the present one.

Social Development through Samurdhi
The main objective of the social development programmes geared through the Samurdhi Authority was to uplift the income level of the marginalized in society, identify the root causes and provide solutions for their moral and spiritual advancement.

Among the programmes(held included) awareness on the prevention of drug use, schemes for common social service, programmes to strengthen the north and east Tamil community, the Samurdhi House Lottery Programme and the Banking Finance division. A Department of the Commissioner of General of Samurdhi was also established to oversee the programme.

The SamurdhiProgramme was a success in reducing poverty and also promoting participation at grass roots level.

The CBK Government undertook a major structural reform in the Treasury, as well as in the Public Service, helping to moderate the public service significantly.

Routine cash management operations were computerized and delays eliminated. The Public Finance Management Reforms was undertaken to ready the Government to become more relevant and responsive to the open economic policies and to stimulate growth.

For the first time a computerized Public Financial Management Information System was developed and installed at every accounting point (about 400) in the public service, networking with the Treasury.

Tender procedures documents were also formulated in 1995 and 1996 for infrastructure development and Public Private Partnerships (PPP).

The primary reasons for introduction of these procedures were to prevent:

● Inordinate delays in Government tender procedure. The process took 24-36 months to complete and it contributed negatively to Government activities

● Inefficiency in Government machinery

● Lack of transparency and allegations of corruption

● Poor rate of disbursement of funds specially foreign aid and loans

● Cost escalation due to delay and corruption

Upgrading Skills – 9000 public servants were trained in the use of computers, the application of CIGAS (Computerised Integrated Government Accounting System) and other relevant accounting principles.

The Institute of Government Accounts and Finance (INGAF)

It was established to train accountants in electronic book keeping, and financial and cash management. The programme offers a Diploma and Post Graduate Degrees in Public Finance Management, accountancy, and programmes to computerize the inland revenue, customs, and excise departments.

This has improved the performance of accountants, rendering public financial management more efficient and transparent. Due to the success of this programme other South Asian countries, including Bangladesh and Nepal now send their personnel for training in Sri Lanka.

INGAF has received international recognition in the training and research of financial management. Currently INGAF is known as The Academy of Financial Service (AFS).

Revised Tender Procedures

Tender procedure documents were produced in 1995 and 1996 for infrastructure development and Public Private Partnerships (PPP) to eliminate delays in government tender procedure, and corruption.

Training programmes were conducted to train officers on tender procedures in all parts of the country. These guidelines contributed immensely to reducing delays and obtaining the best deals for the Government, while increasing transparency. They helped improve the efficiency of the public service by facilitating speedy decision-making and expediting the procurement of goods and services.

The tender guidelines were considered the most comprehensive and clear guidelines ever issued by the government. New features such as standard documents were introduced and all relevant instructions were collated in a single document.

Revision of Financial Regulations

The CBK Government reformed financial regulation books to make them more user-friendly. A 900 page document, was simplified, condensing it to 148 pages.

A separate Ministry for improving the living standards of Plantation Workers was created, called the Estate Infrastructure Development Ministry.

1. The standards of living of the estate workers were very poor. CBK envisioned a speedy development of infrastructure to improve the living standards of workers – housing, drinking water, sanitation, electricity, education and health facilities were all developed.

2. Individual housing per family to the estate community was introduced by CBK by forming a separate housing ministry to the Plantation Sector. Late Hon. Chandrasegaran was in charge of this project. A seven perch land for a housing unit to the estates was introduced by CBK.

3. Estate schools and health centres were taken over by the Government and incorporated into the National Schools and Hospitals Network. New school buildings were constructed in the plantations during this period.
a. 3000 teachers were appointed to the schools from the estate educated children, especially in the up-country areas
b. There were no University in Uva whereas a University was opened in Badulla (UvaWelessa University)

4. Appointing of SamurdhiNiyamaka. GramaNiladari were appointed to the estate from the children of estates