The Sri Lankan banking sector is in some ways fragmented for a country of 20.5m people, and in need of consolidation, but there is little agreement on how that should be done. In total, the country has 25 licensed commercial banks and 56 non-bank financial institutions (NBFI). And while the vast majority of these enterprises are healthy, some...
Sri Lanka has had a poor history of revenue collection. Tax revenues as a percentage of GDP have declined from above 20% in the early 1990s to about 12.2% in 2014. In comparison, Malaysia and Thailand are at about 15%, while Singapore is about 13%. India, however, is at 10%, although it also contains a far larger informal economy.
Worker remittances have been growing over time and now play an important role in the country’s international capital flows. They surpassed $7bn in 2014, up from about $2bn in 2006. Despite levelling off in early 2015, they then reached $8.2bn in 2015, which remains a large portfolio for a $75bn economy.
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