Outlook for 2011-15

• The president, Mahinda Rajapakse, will remain in power throughout the forecast period, but by 2015 his popularity is likely to have fallen from its current high level.
• The United People's Freedom Alliance (UPFA) government is also likely to stay in power throughout 2011-15, owing to its huge parliamentary majority. Its main priorities are likely to be rural and infrastructure development.
• The Economist Intelligence Unit expects real GDP to grow at the relatively rapid rate of 7.4% a year on average in the forecast period. It could expand faster if investment in residential real estate takes off.
• Fast economic growth will come partly at the expense of price stability; we expect inflation to average 6.4% a year in the forecast period, despite supply-side improvements that will help to damp down inflationary pressures.
• Strong economic growth should ensure that the government makes gradual headway in reducing the fiscal deficit, which is expected to narrow to the equivalent of 4% of GDP (excluding grants and privatisation income) by 2015.
• Rising inflows on the services account should help to offset the impact of a rapidly expanding trade deficit, limiting the current-account deficit to an average of 4.4% of GDP a year in the forecast period.

Monthly review

• Heavy rains led to continued flooding throughout February. Over 1m people were affected by the floods, and at their peak in January 362,000 were displaced.
• Sri Lanka received another tranche of assistance from the IMF's Stand-By Arrangement in February, worth around US$220m. The Fund estimates that real GDP growth rose to 7.8% in 2010.
• Consumer prices increased by 7.8% year on year in February, compared with 6.8% in January, as flood disruption pushed up the cost of food.
• In 2010 tourist arrivals rose by 46%, to 654,476, while foreign-exchange earnings from the tourism sector increased by 64.8%, to US$575.9m. Visitor numbers continued to surge in January, rising by 46.2% year on year, to 74,197.
• A new, 42-km stretch of railway between Galle and Matara, in southern Sri Lanka, was inaugurated in February. The track allows trains to run at over 100 km/h, much faster than most trains in Sri Lanka.
• In February Malaysia's Dialog Axiata, the largest mobile-phone operator in Sri Lanka, announced plans to invest US$150m to upgrade its broadband and fibre-optic networks on the island.

The president, Mahinda Rajapakse of the Sri Lanka Freedom Party (SLFP), is idolised as the man who in May 2009 defeated the rebel Liberation Tigers of Tamil Eelam (LTTE, Tamil Tigers), and runs a highly personalised, populist administration. However, his government's harsh treatment of its critics has raised concerns. The arrest in the aftermath of the January 2010 presidential election of defeated opposition candidate, Sarath Fonseka, a former head of Sri Lanka's armed forces, highlighted the government's authoritarian instincts.

Mr Rajapakse exerts a strong grip over the military and police, reinforced through recent appointments and retirements. The president's authority was also bolstered by the passage of a constitutional amendment in 2010 that strengthened his powers and reduced checks on his office. The splits in Sri Lankan society are set to deepen as a result of Mr Rajapakse's hardline approach. Mr Fonseka won strong backing during the presidential election among Muslims and Tamils, and to a lesser extent among more cosmopolitan urban voters. The likelihood that Mr Rajapakse will be able to unite these groups appears remote, and the spectre of an eventual resumption of ethnic violence will therefore continue to loom.

The ruling United People's Freedom Alliance (UPFA, of which the SLFP forms the main component) claimed that it would address Tamil grievances by devolving more power to the island's provinces. However, as a shortage of fiscal resources will limit the funds available, and as Mr Rajapakse favours a centralised style of leadership, it is doubtful that devolution will make real progress in the forecast period. Anti-Tamil discrimination will remain a major social problem. If the government can promote economic development in the east and north, this could help to lessen resentment in the Tamil community. However, there is concern about how obtrusive the army will be in the economic and political life of Tamil-dominated areas.

The current dominance of government by Mr Rajapakse and his relatives is worrying. The concentration of power among a small group linked to the president has irked many within the UPFA, leading to complaints, from senior ministers among others, that they lack real authority or resources-essential factors in the island's patronage-driven politics. Minority parties representing Tamils and Muslims, whose allegiances are flexible, may eventually emerge as forces in parliament, but the size of the UPFA's majority currently limits their influence. The UPFA also controls most of the country's provincial assemblies. Nevertheless, the ebbing of the government's popularity since late 2010 amid large increases in the cost of living has reduced the danger that Mr Rajapakse's government will entrench itself over the longer term. As yet, the main opposition party, the United National Party (UNP), has been unable to capitalise on public discontent. However, if the UNP leader, Ranil Wickremasinghe, is replaced by Sajith Premadasa, a younger, more charismatic figure, the party could begin to seriously challenge the UPFA in the polls.

The UPFA's critics in the media, civil society and abroad will face an aggressive response. Many members of the press have been physically attacked, abducted or killed, and media outlets that have criticised Mr Rajapakse's administration have been forced to close. Nonetheless, this does not seem to have silenced media critics of government policy.

Social unrest could rise in the next five years if opposition parties take their grievances out into the streets, while unusually slow growth in public-sector pay and reforms affecting state-owned enterprises (SOEs) could also stoke labour activism. The LTTE is not expected to re-emerge as a major threat. However, the Tamil separatist movement has deep roots, and isolated terrorist attacks may occur across the island. Security in the north and east will remain poor, with abuses perpetrated by soldiers and also by former terrorists, who have been reduced to engaging in more traditional forms of crime.

Mr Rajapakse was re-elected for a second term in January 2010. His victory represented a genuine mandate from the public, despite some minor concerns among observers about how the campaign was run. The UPFA also won a landslide victory in the parliamentary election in April, and has dominated recent provincial council elections. The next presidential contest is due in 2015. Changes to the constitution passed in September last year, which abolished the two-term limit for presidents, suggest that Mr Rajapakse will again be the UPFA candidate. The next parliamentary election is due to be held by 2016. Given the unusually large size of the current government's majority, it is likely to complete its full term.

Relations between the UPFA and traditional donors in the West will remain tense. In 2009 the government aggressively dismissed donor concerns about an apparent deterioration in the human rights environment, notably towards the end of the civil war period. The risks inherent in this strategy were illustrated when the EU suspended Sri Lanka's preferential access to its markets under the Generalised System of Preferences-Plus (GSP-Plus) scheme in 2010. The Economist Intelligence Unit nevertheless expects an improvement in Sri Lanka's relations with Western countries in 2011-15 as respect for human rights on the island improves. The government's undiplomatic handling of donors has increased the cost of mobilising foreign financial support in the next few years. Although ties with India and China will continue to strengthen and both countries will provide funds for infrastructure improvements, the terms may be less favourable than those available on concessional loans from established aid donors.

Mr Rajapakse and the UPFA are left-leaning and mistrustful of privatisation, but the government has declared that improving the business environment will be a priority in 2011-15. It implemented a well-received pro-business budget in 2010, simplifying and reducing taxes and bureaucracy surrounding investment. However, the risk that policies could be modified or even reversed remains high, and the government has a strong tendency to interfere at the microeconomic level. Sri Lanka's surging trade deficit indicates that, despite plentiful foreign-exchange reserves at present, another balance-of-payments crisis before 2015 cannot be ruled out. Much will depend on whether the necessary inflows of foreign investment can be attracted. The government will also need to continue to exercise restraint with regard to public spending if the fiscal deficit is to be successfully addressed. Although there are plans to list stakes in some SOEs, the government will retain control of these firms, limiting the benefits of listing; full-scale privatisation is off the agenda. Two areas that could see new reforms are road and railway policy, in which partnerships with the private sector could be used to boost investment. This would support Mr Rajapakse's main priorities-namely, rural and infrastructure development, especially in the south and north.

The government projects that fiscal inflows will rise from 14.9% of GDP in 2010 to 16.6% by 2013, and forecasts that total expenditure will fall from 22.9% of GDP to 21.3% in the period. This would enable it to achieve a fiscal deficit of 4.8% of GDP by 2013. On these assumptions, the deficit-reduction targets agreed with the IMF would be missed. As our economic growth forecast is less optimistic than the government's, we expect a deficit of 6% of GDP in 2013, narrowing to 4% by 2015. Increased tax collection will be the main means of curbing the deficit. The president hopes that a simplified payment system and lower tax rates will boost inflows, but persistent inefficiencies in collection, widespread tax evasion (by politicians, among others) and the low income base of the population could thwart this aim. Containing current spending will also prove difficult, as the government faces pressure to increase expenditure on the civil service and the armed forces, which constitute important voter bases. Interest costs, which made up almost 35% of recurrent expenditure in 2009, are another area of uncertainty; if inflation exceeds targets, higher interest rates could push up the government's domestic borrowing costs.

Growth in private-sector credit demand is accelerating, and prices for imported commodities are rising. The risk of inflation taking off looks high, yet the Central Bank of Sri Lanka (CBSL) continued to cut benchmark interest rates until January 2011. These cuts will have to be reversed this year, and if inflation reaches double digits the CBSL may also restrict the liquidity available to banks. In 2012-14 rising confidence among investors and the gradual narrowing of the fiscal deficit should support a reduction in interest rates. This trend will be supported by the more efficient functioning of financial markets, along with greater competition and a deepening of capital markets. However, if the budget deficit were to widen unexpectedly, interest rates could increase again. Another concern is that the authorities have shown a growing tendency to pressurise banks (notably the dominant state-owned banks) to reduce interest rates for political purposes. If this policy is maintained, it could have a distorting effect on Sri Lanka's credit markets and might undermine efforts to control money supply growth.

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Sri Lanka's economic prospects have been boosted substantially by the ending of the civil war, and real GDP growth should average 7.4% a year in 2011-15. The agricultural sector will be supported by increased cultivation in the formerly conflict-ridden northern and eastern provinces (although floods will hit farm output in 2011). The recovery in consumer and business confidence will also spur economic activity. Private consumption growth will be the main driver of economic expansion, fuelled by rising incomes and remittances from expatriate Sri Lankans. Four pillars will support investment: reconstruction efforts in the north and east; public spending on infrastructure (long neglected during the civil war); business investment, as companies seek to capture market share amid rapid economic growth; and rising property investment. Our forecast that real investment growth will average 11.5% a year in 2011-15 could be surpassed if the housing market experiences a boom or foreign investment exceeds our modest expectations.

Economic growth would be stronger were it not for the fact that the past decade has seen an unsustainable fiscal expansion (including spending on the war). The fiscal retrenchment that is required will hold back GDP growth in 2011-15. Moreover, the external sector's contribution to growth will remain negative. Slow growth in Sri Lanka's dominant export markets, the EU and the US, will limit export opportunities, notably for apparel manufacturers. However, rising exports to other emerging markets, such as neighbouring India, will help to offset this effect, ensuring that growth in exports of goods and services (including tourism) remains strong, at 8% a year on average in the forecast period. Improving domestic supplies, especially of food, will help to curb import growth, but imports will nevertheless expand by 8.4% a year on average.

Several negative scenarios exist for the economy, including renewed conflict arising from ethnic tensions, and an outflow of funds (and consequent balance-of-payments problems) should foreign investor confidence deteriorate. Bad weather that significantly reduces agricultural output could slow GDP growth, as could an unexpected surge in inflation that forces the government to tighten monetary policy more than currently expected. However, as the north and east undergo post-conflict rehabilitation, there are also upside risks to our growth forecast that outweigh the downside possibilities.

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The rate of inflation is likely to accelerate on a year-on-year basis in 2011, and inflation could rise to double digits. This reflects loose credit conditions, higher prices for imported commodities, the negative impact of floods on local food supply and higher tariffs for electricity. Inflation is expected to average 6.4% in 2011-15, a level that the CBSL may view as tolerable. A number of factors on the supply side will help to restrain price rises; they include growth in local food production (which should bounce back to rapid expansion in 2012) and improvements to infrastructure. Nevertheless, several factors could cause the rate of inflation to exceed our forecasts. Entrenched public expectations of rapid price rises could lead to inflation-busting wage claims and allow companies to raise prices. Meanwhile, as GDP growth accelerates, supply-chain bottlenecks could emerge, while labour shortages will boost pay rises among skilled and semi-skilled workers. Perhaps the biggest risk, however, is that the government could revert to free-spending populist fiscal policies, stoking inflationary pressures.

Sri Lanka's foreign-exchange reserves currently look comfortable, as they stand at record levels. In our core scenario, strong inflows of remittances and loans will continue to support the currency, and wide interest-rate differentials with OECD countries will attract portfolio investment. The Sri Lanka rupee will remain fairly strong against the US dollar in 2011-12, contributing to a loss of export-competitiveness. This will generate underlying pressure for depreciation, and we believe that the government will allow the currency to weaken in 2013 once its other inflation concerns begin to ebb. (Depreciation is likely to raise the cost of imports, stoking inflationary pressure.) Given the relative openness of the capital account, there will be a continuing risk in 2011-15 that foreign exchange could suddenly drain away from Sri Lanka should investors lose confidence-for example, if a dispute were to develop between the IMF and the government. In such a scenario, the currency could still lose value suddenly.

In the forecast period both imports and exports of goods will grow rapidly. However, as imports will start from a higher base and will maintain a faster rate of expansion in nominal terms, the merchandise trade deficit will widen considerably, from an estimated US$4bn in 2010 to US$8.4bn by 2015. Services exports will be boosted by booming tourism inflows, the development of the business-process outsourcing sector, and higher income from trade and shipping services (partly owing to the opening of new port facilities). In addition, transfers income from remittances by Sri Lankans working abroad should grow healthily in 2011-15. These expanding sources of foreign exchange should help to keep the current-account deficit smaller than 5% of GDP throughout the forecast period.

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Extreme weather on the island in the final quarter of 2010 caused flooding that forced thousands of families from their homes, but the situation deteriorated in early 2011 as further heavy rain brought the number of people affected to over 1m. At the peak of flooding in January over 360,000 people were displaced. Although that number fell in February, continued heavy rainfall actually resulted in more serious damage to housing in that month as reservoirs overflowed. The Eastern province was the region that was most badly affected by the disaster-India sent an aircraft load of food for distribution in the province-but the Northern and North-Central provinces were also hit hart.

So far the global response to the disaster has been muted, possibly because Sri Lanka's floods have not received much attention in international media. The Asian Development Bank (ADB) has granted US$3m in emergency flood assistance, and the UN has appealed for US$50m for its aid package. As of end-February some US$25m had been pledged, although only one-half of that sum was regarded as representing firm commitments.

The UN's high-profile role in the flood assistance effort is ironic, given the strained nature of current ties between Sri Lanka's United People's Freedom Alliance government and the UN. Signs of a thaw in the frosty relationship were evident in February, when the secretary of Sri Lanka's Ministry of External Affairs, Romesh Jayasinghe, and the attorney-general, Mohan Peiris, travelled to the US to talk to UN officials. It is thought that the trip was linked to the proceedings of a UN panel that is due to report soon on human rights problems during the closing stages of Sri Lanka's civil war. However, none of those involved were prepared to comment officially. Sri Lanka's government, under pressure from nationalist hardliners in its ranks, has been keen to show that it is resisting the UN's investigation, which it views as outside interference.

In January and February the government held discussions with the Tamil National Alliance (TNA), a party that was formerly viewed as having close links with the rebel Liberation Tigers of Tamil Eelam (LTTE, Tamil Tigers). Talks focused on constitutional changes that might help to bring about ethnic reconciliation and lasting peace. They also touched on the resettlement of people in high-security zones in the Northern province. TNA representatives voiced concerns that a number of tractors donated by India and meant for the Northern and Eastern provinces had ended up instead in the Southern province, a majority-Sinhalese region with close ties to Sri Lanka's president, Mahinda Rajapakse.

The government has stressed that it remains committed to returning Muslims displaced by the LTTE from the Northern province. Some 8,000-10,000 of the 70,000 people thought to have been forced from their homes during the purge of Muslims that the LTTE carried out in 1990 have already returned, according to the government. Most of the remainder are currently living in and around Puttalam, in the north-west of the island.

In February the government appeared to grant more power to the Ministry of Defence, in effect giving it the authority to approve all moves to develop and fill land in the districts of Gampaha, Kalutara and the capital, Colombo. The power will be exercised by a planning committee made up of representatives from the Urban Development Authority (UDA), the Central Environmental Authority, the Department of Agrarian Services and the Sri Lanka Land Reclamation and Development Corporation (SLLRDC). Both the SLLRDC and the UDA are under the control of the defence ministry.

Although centralising authority to develop land in these regions may speed up the process of granting approvals, there are fears that the increasing influence of the defence ministry in the approvals process represents another step towards the concentration of power in the hands of the Rajapakse family. The president is also minister for defence, while his brother, Gotabhaya Rajapakse, is defence secretary.

In early February the IMF released a sixth tranche of funds, worth around US$220m, under the Stand-By Arrangement (SBA) with Sri Lanka. The IMF remains positive about Sri Lanka's performance, noting that GDP growth in 2010 is estimated at an impressive 7.8%. Although the Fund highlighted the fact that inflation had risen, it attributed this to rising food prices, primarily linked to the floods that have affected large areas of land used for growing rice and vegetables. The government's figures show that consumer price inflation hit 7.8% year on year in February, up from 6.8% in January.

The IMF remains confident that the budget deficit target of 6.8% of GDP will be adhered to in 2011. Its resident representative, Koshy Mathai, pointed out in February that Sri Lanka has a relatively low level of foreign direct investment, although such inflows are set to double in 2011 from last year's figure of US$375m. He also called on the government to allow flexibility in the exchange rate so as to prevent currency strains building up.

The tourism industry put in a stellar performance in 2010, with tourist arrivals up by 46.1% to 654,476 and earnings rising by 64.8% to US$575.9m. A number of related industries, from hotels to alcoholic beverages, were boosted by the sector's boom. Strong growth continued into January this year, with the number of visitors rising by an impressive 46.2% to 74,197 in that month. The Cricket World Cup (which Sri Lanka is co-hosting) should serve to maintain the surge in numbers in February, but the sector is likely to come under strain as the year goes on, owing to the limited number of available hotel rooms that are suitable for international travellers.

The chairman of the Sri Lanka Tourism Development Authority, Nalaka Godahewa, suggested in March that owners of vacant residences in Colombo might wish to put them to use as serviced apartments for tourists. He also noted that there were some 2,000 circuit bungalows (rentable facilities often used by travelling officials) owned by state agencies that might be upgraded to provide accommodation. The authority believes that the island will need some 35,000 rooms by 2016 to cope with an estimated 2.5m tourists in that year. This target will be extraordinarily tough to achieve, as Sri Lanka currently has just 12,000 rooms.

Attracting investment into the sector is not likely to be made easier if the recent plan announced by the Sri Lanka Ports Authority (SLPA) to spend US350m to reclaim land along Colombo's seafront to build a "new city" are realised. Hong Kong-based Shangri-La Hotels and Resorts recently announced a major hotel investment in the city, whose views of the sea seem likely to be blocked if the project goes ahead.

According to official sources, Sri Lanka's car imports shot up from 5,762 in 2009 to 23,072 in 2010, thanks to strong economic growth and the government's decision to slash import duty on vehicles. Import barriers had been raised sharply in 2009 as part of an effort to conserve dwindling foreign exchange. A total of 359,243 new registrations of vehicles of various types were lodged in 2010, compared with only 204,075 in 2009.

In March 2011 a Sri Lankan firm, Micro Cars, the only company that designs and builds cars locally, announced plans to expand production of its Micro Panda line. Its executives described the local vehicle market as buoyant. They also unveiled plans to strengthen the company's presence across the island with new showrooms and service centres, in order to optimise after-sales service support.

Dialog Axiata, Sri Lanka's largest mobile-phone operator, announced plans in February to invest a further US$150m to strengthen its broadband and fibre-optic network. Dialog Axiata claims 7m subscribers in a market that boasted a total of 16.3m mobile customers in the third quarter of 2010. A rival operator, UAE-based Etisalat, announced in February that it hoped to add 170 new base stations by the end of April to expand its coverage in the north and east of the island.

Telecommunications companies are not the only ones that are planning large investments. In February the government announced that it had received a proposal from Mitchell Consortium, which comprises Australian, Sri Lankan and Brazilian firms, to invest US$700m in a heavy-industrial zone near the eastern port of Trincomalee. The zone would include coal and iron-ore plants for steelmaking, and also a sugar refinery. It is not yet clear how realistic the proposal is, but if successful it could serve as one of the government's flagship foreign investment projects.

The state-owned SLPA reported in February that it had handled a record volume of containers in January. The total of 205,539 TEUs handled in that month surpassed the previous record, set in August 2010, and represented year-on-year growth of 24%. The SLPA announced that when traffic handled by the private South Asia Gateway Terminals operator is included, Colombo's port processed 366,961 TEUs in January, up by 11.8% year on year. In 2010 the port handled 4m containers, up from 3.5m in 2009.

Sri Lanka's domestic trade capacity is being boosted as a number of landmark infrastructure projects are completed. In February a new railway linking the southern cities of Galle and Matara was inaugurated. The 42 km of track marks the first phase of an investment project funded in part by a US$167m loan from the Indian government. In contrast to the island's traditionally slow rail network, the new track will allow trains to reach speeds of over 100 km/h. Further phases of the project will take the line to Hikkaduwa, Kalutara South and Maradana in Colombo.

Meanwhile, the government has expressed confidence that the portion of the southern expressway linking Kottawa (a suburb near Colombo) and Galle should be open by August. The road will be a toll route and should enable vehicles to reach speeds of 100 km/h. When finally completed, the southern expressway should stretch all the way from Colombo to the southern port city of Hambantota.

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Please see graphic below

Please see graphic below

Please see graphic below

Land area

65,610 sq km

Population

20m (2007 mid-year government estimate)

Main towns

Population in '000 (2007)

Colombo (capital): 2,456 Kandy: 1,380

Gampaha: 2,140 Kalutara: 1,111

Kurunegala: 1,524 Ratnapura: 1,086

Climate

Tropical

Weather in Colombo

Hottest month, May, 26-31°C (average daily minimum and maximum); coldest month, December, 22-29°C; driest month, February, 69 mm average rainfall; wettest month, May, 371 mm average rainfall

Languages

Sinhalese, Tamil, English

Measures

The metric system is now predominant

Currency

Sri Lanka rupee (SLRs); SLRs1 = 100 cents. Average exchange rate in 2010: US$1:SLRs113.1

Time

5 hours 30 minutes ahead of GMT

Fiscal year

January-December

Public holidays

January 15th (Tamil Thai Pongal Day); January 19th (Duruthu Full Moon Poya Day); February 4th (National Day); February 16th (Holy Prophet's Birthday); February 17th (Navam Full Moon Poya Day); March 2nd (Maha Sivaratri Day); March 19th (Medin Full Moon Poya Day); April 13th-14th (Sinhala and Tamil New Year); April 17th (Bak Full Moon Poya Day); April 22nd (Good Friday); May 1st (May Day); May 17th-18th (Vesak); June 15th (Poson Full Moon Poya Day); July 14th (Esala Full Moon Poya Day); August 13th (Nikini Full Moon Poya Day); August 31st (Eid al-Fitr, End of Ramadan); September 11th (Binara Full Moon Poya Day); October 11th (Vap Full Moon Poya Day); October 26th (Deepavali); November 6th (Eid al-Adha, Hadji Festival Day); November 10th (Il Full Moon Poya Day); December 10th (Unduvap Full Moon Poya Day); December 25th (Christmas Day)

Official name

Democratic Socialist Republic of Sri Lanka

Form of state

Executive presidency based on the French model

The executive

The president is the head of state, with executive powers. Elected for a period of six years by universal adult suffrage, the president may dissolve parliament 12 months after a legislative election

National legislature

Unicameral legislature; the 225 members are directly elected for six years under a system of modified proportional representation

Local government

Under the 13th amendment to the constitution, passed in 1987, extensive powers have been devolved to nine directly elected provincial councils with a view to meeting Tamil demands for greater autonomy. Several provincial council elections in 2008-09 were won by the United People's Freedom Alliance (UPFA) or parties affiliated to it

National elections

The president and parliament are elected for six-year terms, but elections may be called early provided that certain constitutional conditions are met. In the 2010 presidential election the UPFA candidate, Mahinda Rajapakse, secured re-election with a clear victory, winning just under 58% of the vote; an estimated 74.5% of the electorate voted. The next presidential election will take place by November 2015; the next parliamentary election will be held by April 2016

National government

Mr Rajapakse, of the Sri Lanka Freedom Party (SLFP), was elected for his first term as president in 2005 and re-elected in January 2010. The UPFA was re-elected in April 2010 with 60.4% of the vote, giving it 144 seats in the 225-seat legislature. This represented a major victory for the UPFA but left it short of the two-thirds majority required to change the constitution

Main political organisations

Governing coalition: the UPFA, now based mainly around the People's Alliance (PA), which itself is built around the SLFP. Other main parties: the Janatha Vimukthi Peramuna (JVP), the United National Party (UNP), the Sri Lankan Muslim Congress (SLMC), the Tamil Makkal Viduthalai Pulikal (TMVP) and the Tamil National Alliance (TNA)

Main members of the government

President; also in charge of defence & finance: Mahinda Rajapakse

Prime minister: D M Jayaratne

Key ministers

Agriculture: Mahinda Yapa Abeywardena

Defence secretary: Gotabhaya Rajapaksa

Disaster management: A H M Fowzie

Economic development: Basil Rajapakse

Foreign affairs: G L Peiris

Industry & commerce: Rishad Bathiyutheen

Irrigation & water resources management: Nimal Siripala de Silva

Justice: Athauda Seneviratne

Petroleum industries: Susil Premajayantha

Post & telecommunications: Jeewan Kumaranatunga

Power & energy: Champika Ranawaka

Public management reforms: Ratnasiri Wickramanayake

State resources & enterprise development: P Dayaratne

Central bank governor

Ajith Nivard Cabraal