SRI LANKA: UNAFFORDABLE SOCIALISM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000500230027-4
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 14
• Document Creation Date: December 9, 2016
• Document Release Date: February 14, 2000
• Sequence Number: 27
• Publication Date: September 1, 1975
• Content Type: REPORT

CI~CJ~:R RR, ~.~5-28
Seri,,, l}nk~; Un~ff~rdab~l~e'Soc~ali~sm
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Conftdontfal
Sri Lanka.? Una f ford~blc So~cialT.rm
Confidential
ER RP 75-28
Sept~mb~r 1975
~?Pr N ? 5 5
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NATIONAL SECURITY INFORMATION
Unauthorized Uisclosuro Subject to Criminal Sanctions
Clenlf'-d br Ots71f
Eumpl Irern O?nanl D?deullltollen kMdul?
sl E.O. IIAS] ???mPtlPn ~er~per~r
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AuremaHaall ds~IOUIH~d en.
do4 ImjronCbl? is d?I~~mIM
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 - - -- pproved For Re-lease
SUMMARY AN(J CONCLUSIONS
!. Sri Lanka is a no-growth welfare state, which until rcccnc,ly
could get by with rninlrnal foreign assistance. This situation is changing, in
part because of Calarnbo's chronic neglect of its key agrlculturai sector,
in part because of the higher costs of lrnported oil and grain.
2. Output iro~Y- tret?- c-ops -- tea, rubber, and coconuts ??- which
provide 75`X~ of export c~rrnings, is declining under the pressure of
gOYCrnlnCnt ta'~COYCC5, a discrirnlnatory rxchanpc rate systcrr., and heavy
taxation. }lice prc~;uction, which increased steacllly during 19G5-70, has
failed to increase further since 1970. Tt~e country's heavy dependence on
irnportcd grain and petrolrurn and its inability to cx~and exports have
forced stringent controls on nonfood imports and an increased reliance on
short-term foreign loans.
3. Nraspects for sustained economic grown} arc poor. ('oreign
investors arc cf fcctivc{y for_kcd out by govcrnrncnt policy, and domestic
investors arc discouraged by constraints on private econarnic activity. The
govcrne~t shows no signs of shifting toward growth-oriented policies.
f=ailure to generate ;rawth has worsened w:desprcad unemployment ant,
has eroded welfare programs. Tt~c attention of the Sri Lankan government
r.~rnains focused on its hosting of the 197b nonaligned countries confer-
cncr and on the national elections slated to he held before mid-1977.
Eiecause of these factors, Cotornbo is likely to depend upon increasing
amounts of foreign assistance simply to maintain welfare progrart~s.
i:ai}arc to rr-a:ntain these programs will increase file likelihood of political
instability.
Note: Comments and queries re Cardin ~ this publication arc wrlcorncd.
They may be directed to of the Office of Cconomic
Research, Codc 143, Extcnsron 25X1A
September f975
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I~olic~Oricntation
4. Sri Lanl