Economic and Social Development / Planning: Priorities, Appraisal and Measurement
The Economic and Social Development/Planning domain asks how Sri Lanka sets priorities, appraises projects and measures outcomes - from the budget cycle through cost-benefit analysis to the SDG indicators that monitoring reports use.
Planning architecture
- The Ministry of Finance, through the National Planning Department, prepares the Public Investment Programme and the Medium Term Budgetary Framework, a three-year rolling fiscal envelope.
- Plans nest: long-term vision, sector strategies, annual budget, then monitoring against SDG indicators.
- Structure of the economy: services supply roughly 58% of GDP, industry about 25%, agriculture under 10%; export earnings concentrate in textiles and garments, tea and tourism.
- The project cycle runs identification, preparation, appraisal, implementation, and monitoring and evaluation; the logical framework fixes SMART indicators at appraisal.
Appraisal tools
- NPV: discount future benefits and costs at the social discount rate; accept if NPV > 0.
- EIRR: accept if it exceeds the opportunity cost of capital. BCR and payback support the same decision.
Worked example
A project costs LKR 1,000 million now and yields 600 million in each of years 1 and 2 at a 10% discount rate. NPV = 600/1.1 + 600/1.21 − 1,000 = 545.5 + 495.9 − 1,000 = +41.4 million. Positive, so accept. Note that the undiscounted total of 1,200 million overstates the case.
Traps that cost marks
- Comparing nominal money across years instead of discounted values.
- Confusing GDP growth with per-capita income growth.
- Double counting intermediate goods when calculating output.