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How do taxes and transfers impact poverty and inequality in developing countries?

Gabriela Inchauste's picture

We know that fiscal policy can be harnessed to reduce inequality in low- and middle-income countries, but until now, we knew less about its ability to reduce poverty. Our recent volume looks at the revenue and spending of governments across eight low and middle income countries (Armenia, Ethiopia, Georgia, Indonesia, Jordan, Russia, South Africa and Sri Lanka), and it reveals that fiscal systems, while nearly always reducing inequality, can often worsen poverty.   

Fresh thinking on economic cooperation in South Asia

Nikita Singla's picture
 Aamir Khan/ Pakistan, Sreerupa Sengupta/ India, Sanjay Kathuria/ World Bank, Mahfuz Kabir & Surendar Singh/ Bangladesh) Photo By: Marcio De La Cruz/ World Bank
Young Economists sharing the stage with Sanjay Kathuria, Lead Economist and Coordinator, Regional Integration (Left to Right: Aamir Khan/ Pakistan, Sreerupa Sengupta/ India, Sanjay Kathuria/ World Bank, Mahfuz Kabir/Bangladesh & Surendar Singh/ India). Photo by: Marcio De La Cruz/ World Bank


That regional cooperation in South Asia is lower than optimal levels is well accepted. It is usually ascribed to – the asymmetry in size between India and the rest, conflicts and historical political tensions, a trust deficit, limited transport connectivity, and onerous logistics, among many other factors.

Deepening regional integration requires sufficient policy-relevant analytical work on the costs and benefits of both intra-regional trade and investment. An effective cross-border network of young professionals can contribute to fresh thinking on emerging economic cooperation issues in South Asia.

Against this background, the World Bank Group sponsored a competitive request for proposals.  Awardees from Bangladesh, India, and Pakistan, after being actively mentored by seasoned World Bank staff over a period of two years, convened in Washington DC to present their new and exciting research. Research areas included regional value chains, production sharing and the impact assessment of alternative preferential trade agreements in the region.

Young Economists offer fresh thoughts on economic cooperation in South Asia

Mahfuz Kabir, Acting Research Director, Bangladesh Institute of International and Strategic Studies and Surendar Singh, Policy Analyst, Consumer Unity Trust Society (CUTS International) presented their research: Of Streams and Tides, India-Bangladesh Value Chains in Textiles and Clothing (T&C). They focus on how to tackle three main trade barriers for T&C: a) high tariffs for selected, but important goods for the industries of both countries; b) inefficient customs procedures and c) divergent criteria for rules of origin classification.

Sreerupa Sengupta, Ph.D. Scholar at Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi discussed Trade Cooperation and Production Sharing in South Asia – An Indian Perspective. Reviewing the pattern of Indian exports and imports in the last twenty years, her research focuses on comparing the Global Value Chain (GVC) participation rate of India with East Asian and ASEAN economies. Barriers to higher participation include a) lack of openness in the FDI sector; b) lack of adequate port infrastructure, and long port dwell times; and c) lack of Mutual Recognition Agreements (MRAs).

Aamir Khan, Assistant Professor, Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad presented his work on Economy Wide Impact of Regional Integration in South Asia - Options for Pakistan. His research analyzes the reasons for Pakistan not being able to take full advantage of its Free Trade Agreement (FTA) with China, and finds that the granting of ASEAN-type concessions to Pakistan in its FTA with China would be more beneficial than the current FTA arrangement. The work also draws lessons for FTAs that are currently being negotiated by South Asian countries.

Sri Lanka: Building a more resilient economy

Smriti Daniel's picture



At the launch of the Sri Lanka Development Update (SLDU), our Twitter chat #SLDU2017: Environmental Benefits of Economic Management set out to explore how Sri Lanka could meet the twin challenges of increasing its physical and financial resilience.
 
The panel comprised experts from the World Bank - Country Director for Sri Lanka and the Maldives, Idah Pswarayi-Riddihough; Senior Economist Ralph van Doorn and senior environmental specialist Darshani De Silva – and Kanchana Wickramasinghe, a research economist in the Institute of Policy Studies. Together, they unpacked the SLDU, discussed its key findings and fielded questions from across the region around its main themes.
 
The bi-annual report, notes key economic developments over the preceding months, placing them in a longer term and global perspective; in the Special Focus section, it explores topics of particular policy significance to Sri Lanka. 
 
Ralph started with the idea that Sri Lanka faces a window of opportunity during which key reforms could transform the country and its economy. He noted that Sri Lanka’s position in the global economy improved its global growth prospects, as well as that of its key export partners. Low commodity prices and the restoration of the GSP+ preferential trade arrangement with the EU had also combined to improve the outlook for the Sri Lankan economy.

For Idah, the country’s mood and the government’s commitment to change were critical to success:   
 
The panel delved into how natural disasters and extreme weather events posed a threat to Sri Lanka’s growing economy. In the short-term the damage was clear and serious, with losses amounting to several billions a year, as Idah noted in her blog. During the chat, she emphasised how Sri Lanka needed to be prepared for future disasters or it would cost the country enormously.
 
Kanchana pointed out that in the long-term, disasters could set back poverty alleviation efforts, especially in agricultural and rural areas, adding:
 

With the chat underway, questions poured in from an online audience who were interested in diverse issues – from managing Sri Lanka’s ongoing drought and its impact on the Northern Province to what insights the SLDU had to offer other countries in the region such as India.

When in the eye of a storm….

Idah Z. Pswarayi-Riddihough's picture
Abandoned fishing boats lay on the banks of the dried Siyambalankkatuwa reservoir in Sri Lanka's Puttalam District, Aug. 10, 2017. Thomson Reuters Foundation/Amantha Perera
Abandoned fishing boats lay on the banks of the dried Siyambalankkatuwa reservoir in Sri Lanka's Puttalam District, Aug. 10, 2017. Thomson Reuters Foundation/Amantha Perera
This year, yet again, flooding caused by heavy monsoon rains came and receded. Meanwhile, this year alone, more than one million people have been hard hit by the worst drought in 40 years.
 
The media, with few exceptions, have moved on to other topics and a sense of calm pervades. 
 
We are in the eye of the storm -- that misleading lull before mother nature unleashes her fury once again. 
 
In Sri Lanka alone, costs from natural disasters, losses from damage to housing, infrastructure, agriculture, and from relief are estimated at LKR 50 billion (approx. USD 327 million).  The highest annual expected losses are from floods (LKR 32 billion), cyclones or high winds (LKR 11 billion), droughts (LKR 5.2 billion) and landslides (LKR 1.8 billion). This is equivalent to 0.4 percent of GDP or 2.1 percent of government expenditure. (#SLDU2017). Floods and landslides in May 2016 caused damages amounting to US$572 million.   
 
These numbers do not paint the full picture of impact for those most affected, who lost loved ones, irreplaceable belongings, or livestock and more so for those who are back to square one on the socio-economic ladder.
 
Even more alarming, these numbers are likely to rise as droughts and floods triggered by climate change will become more frequent and severe. And the brief respite in between will only get shorter, leaving less time to prepare for the hard days to come.
 
Therefore, better planning is even more necessary. Sri Lanka, like many other countries has started to invest in data that highlights areas at risk, and early warning systems to ensure that people move to safer locations with speed and effect.
 
Experience demonstrates that the eye of the storm is the time to look to the future, ready up citizens and institutions in case of extreme weather.
 
Now is the time to double down on preparing national plans to respond to disasters and build resilience. 

It’s the time to test our systems and get all citizens familiar with emergency drills. But, more importantly, we need to build back better and stronger.  In drought-affected areas, we can’t wait for the rains and revert to the same old farming practices. It’s time to innovate and stock up on critical supplies and be prepared when a disaster hits.
 
It’s the time to plan for better shelters that are safe and where people can store their hard-earned possessions.
 
Mobilizing and empowering communities is essential. But to do this, we must know who is vulnerable – and whether they should stay or move.  Saving lives is first priority, no doubt. Second, we should also have the necessary systems and equipment to respond with speed and effect in times of disasters. Third, a plan must be in place to help affected families without much delay.
 
Fortunately, many ongoing initiatives aim to do just that.

Sri Lankan Winners and exciting news: #StoriesfromLKA photo contest!

Tashaya Anuki Premachandra's picture

The three winning pictures of the online campaign #StoriesfromLKA

World Bank Sri Lanka launched an online campaign titled #StoriesfromLKA during the month of June celebrating World Environment day “Connecting People to Nature”. The campaign included online interactions to learn about World Bank operations related to the environment and a photo competition to appreciate the natural beauty of Sri Lanka that needs to be preserved while Sri Lanka pursues a development drive.
This competition began on the 21st of June and aimed at showcasing the many talented photographers from Sri Lanka as well as celebrating the rich flora and fauna of the country. After the contest ended on June 30th, 167 entries were shortlisted. We asked you which photos were your favorites and you voted on your selections through social media. Your votes helped us narrow down the top three winners, here they are:

Twitter chat: Economic benefits of environment management in Sri Lanka

Ralph van Doorn's picture

Join us for #SLDU2017: Economic Benefits of Environment Management. This Twitter chat will be hosted by World Bank South Asia

What’s happening?

Join us for #SLDU2017: Economic Benefits of Environment Management. This Twitter chat will be hosted by World Bank South Asia (@WorldBankSAsia) in collaboration with the Institute for Policy Studies IPS (@TalkEconomicsSL).
 
When is it?
August 21, 2017 from 5.30 – 7.30 pm
 
Unpacking #SLDU2017
The chat will explore the findings of the Sri Lanka Development Update (SLDU), published this June.
 
I look forward to engaging with you together with a panel from different areas of expertise.
 
We’ll be discussing priority reforms with a focus on how Sri Lanka can better manage both its business and natural environment to bolster economic growth and sustain development.
 
In recent years, natural disasters have left parts of this island nation devastated, exacting a significant economic, fiscal and social toll. The SLDU identifies other challenges as well, pressing the case for fiscal consolidation, a new growth model, improved governance and programs to buffer against risk.
 
The latest update cautions against adopting piecemeal solutions, noting that the challenges facing the island nation are inter-linked and require a comprehensive and coordinated reform approach.
 
In the end, we also hope this Twitter chat will allow us to learn from you as we begin our preparations for the next SLDU.
 
How can you participate?
Never taken part in a Twitter chat before? It’s simple. Just think of this as an online Q&A. @WorldBankSAsia will moderate the discussion, posing questions to panellists. You are encouraged to join in too! Follow along, retweet and engage. If you have a question, simply tweet it out using the hashtag #SLDU2017. We’ll see it and try to get you some answers.

The road to resilience: sharing technical knowledge on transport across borders

Shanika Hettige's picture
Photo: Sinkdd/Flickr
For many countries, damages and losses related to transport are a significant proportion of the economic impacts of disasters, often more than destruction to housing and agricult+ure in value terms. For example, a fiscal disaster risk assessment in Sri Lanka highlighted that over 1/3 of all damages and losses over the past 15 years were to the transport network. In addition, climate change increases the damages and losses.
 
In the Kyrgyz Republic, where 96% of all cargo travels by road, any disaster-related disruptions to the road network would have severe repercussions on the economy. The Minister of Transport and Roads, Mr. Zhamshitbek Kalilov, is charged with protecting these systems from all kinds of natural hazards, from avalanches to floods.
 
Working to support country officials, like Mr. Kalilov, is why the World Bank Resilient Transport Community of Practice (CoP) and the Disaster Risk Management Hub of the Global Facility for Disaster Reduction and Recovery (GFDRR) organized the Technical Knowledge Exchange on Resilient Transport on May 8-12.

Held in Tokyo, the week-long exchange brought together World Bank clients and teams from 16 countries across all regions to share concepts and practices on resilient transport, including systems planning, engineering and design, asset management, and contingency programming. The exchange drew upon the experience of several countries and international experts who showcased innovative approaches and practical advice on how to address risk at every phase of the infrastructure life-cycle.

What were your favorite entries from the Sri Lanka environment photo contest?

Tashaya Anuki Premachandra's picture

Inspired by Sri Lanka's incredible natural beauty, the World Bank organized a photo contest starting on June 21st aimed at showcasing the many talented photographers among us as well as celebrating the rich flora and fauna of Sri Lanka. We received an overwhelming response from many talented photographers, both professional and amateur, who sent us hundreds of awe-inspiring entries.

After the contest ended on June 30th, 167 entries were shortlisted. We asked you which photos were your favorites and you voted until 6PM Monday on your selections through social media. Without further ado, here are the top 10 based on your choices!

Let us know what you think in the comments below and don't forget to follow World Bank Sri Lanka on Facebook as well as the World Bank's Country Director for Sri Lanka and Maldives, @Idah_WB on Twitter

1 - Ganindu Madhawa

2 - Balamurali Ellamurugan

3 - Shehan Thiwantha

4 - Shehan Thiwantha

5 - Shehan Thiwantha

6 - Ganindu Madhawa

7 - Ganindu Madhawa

8 - Kasun De Silva

9 - Vinod Liyanage

10 -  Kasun De Silva

Update: #StoriesFromLka photo contest

Tashaya Anuki Premachandra's picture

Sri Lanka, the emerald isle, is endowed with natural beauty.  Surrounded by the Indian Ocean, the island nation is replete with wondrous wildlife, magnificent landscapes and natural wonders.

Inspired by this, the World Bank in Sri Lanka organized a photo contest on 21st June, 2017. This contest, one of several organized by the Bank, is aimed at showcasing the many talented photographers among us as well as celebrating the rich flora and fauna of Sri Lanka.
 

Photo Credit: Mokshana Wijeyeratne, World Bank

We received an overwhelming response from many talented photographers, both professional and amateur, who sent us hundreds of awe-inspiring entries. The contest ended on 30th June, 2017. We have now shortlisted a total of 167 entries after removing those which had issues with reference to clarity, quality and relevance.

Now, it's time to look for the winners and we are putting you in the driver's seat. Crowdsourcing, as you know, is a very popular method of selection for online contests globally. Therefore, for this particular contest, the winner will be chosen on the basis of the number of likes that you have clicked.

Disasters, funds, and policy: Creatively meeting urgent needs and long-term policy goals

Zuzana Stanton-Geddes's picture

Photo: tro-kilinochchi / Flickr

When it comes to responding to disasters, time is of the essence. Help needs to come immediately to save lives; recovery and reconstruction have to start swiftly to lessen the impact.

However, while money is critical to this response, it’s not just about funding. Indeed, funds need to match the event scale, target the right areas and sectors, and smoothly flow to communities in need. But in order for that to happen, sound public policy on risk and frameworks have to be in place.  

To address both urgent financial needs while pursing strategic disaster risk management policy goals, countries have been using the World Bank’s development policy loan with a catastrophe deferred drawdown option or, more widely known as the Cat DDO.  


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