Central Bank says prosperity on the up

Citing a self-compiled but a comprehensive index, the Central Bank said yesterday that prosperity in the country has been improving.

The Central Bank said the Sri Lanka Prosperity Index (SLPI) between 2009 and 2011 has increased with an improvement in all three sub-indices – the Economy and Business Climate sub-index, the Well-Being of the People sub-index, and the Socio-Economic Infrastructure sub-index.

“The SLPI rose by 4.1% in 2011 up from 3.1% in 2010. The most marked improvement for the period 2009 to 2011 was observed in the Socio-Economic Infrastructure sub-index which rose by 4.9% in 2011 from 3.7% in 2010,” the Central Bank said.

The Economy and Business Climate sub-index increased by 4.0% in 2011 from 2.1% in 2010. The Well-Being of the People sub-index increased by 3.6% in 2011 compared with 3.7% in 2010.

The SLPI was introduced by the Central Bank in 2008 to fulfil the need for a composite indicator to assess the overall status of prosperity in the country as a whole and in each of its provinces. The SLPI is a multi-dimensional indicator reflecting the economic and social developments in the country and the provinces on an annual basis.

The performances of three sub-indices are measured by using 26 proxy variables. Each sub-index has equal weightage in the SLPI.

The SLPI provides national policy makers, provincial authorities, business, and community stakeholders with an index to measure the prosperity of provinces in a more holistic manner.

 The SLPI could also be used to identify their strengths and weaknesses in provinces and to formulate policies for attaining higher standards and to reduce regional disparities leading to balanced growth in the country.

The Central Bank also said the Prosperity Index (PI) of all provinces increased during 2009-2011 with an improvement in all three sub-indices. During the period, the top five ranks in the SLPI were maintained by the Western, Southern, Central, North Western, and Sabaragamuwa Provinces respectively.

The Northern Province recorded the highest growth rate, moving its province to six in 2011 from nine in 2009. Although the prosperity levels in all provinces have continuously increased over the years, the relative position of some provinces declined due to greater improvements observed in other provinces.

A steady increase in the all island and provincial prosperity levels could be observed in 2009, 2010 and 2011.

The Western Province continued to have the highest SLPI rank and was the only province above the national average. In 2011, Western Province experienced a growth rate of 3.5% in its PI and occupied the top position in all three sub-indices.

With regard to variables, notable improvements were made in per capita GDP, reduction in poor households, vehicle ownership, telephone density and schools having English medium classes and computer facilities. However, the pupil teacher ratio and number of reported crimes of the province remained highest of all provinces throughout the period of 2009-2011.

The Southern Province maintained its rank of second position while indicating higher performance in the two sub-indices – Economy and Business Climate and Socio-Economic Infrastructure. The areas in which improvements were made were per capita GDP, banking density, GCE O/L pass rate and schools having English medium classes, safe drinking water, and computer facilities, though a higher increase in provincial inflation was observed in 2011 compared to other provinces.

The Central Province maintained its rank of third position, while its PI growth rate declined in 2011. However, it occupied higher positions in the Well-Being of the People and Socio-Economic Infrastructure sub-indices due to higher levels in school density, supermarket density, road density and a reduction in reported crimes. On the other hand, the lower position of the Central Province in the Economy and Business Climate sub-index was due to lower informal sector wages and higher provincial inflation.

The North Western Province ranked in fourth position in the SLPI and its three main sub-indices. Improvements in the areas of per capita GDP, industrial density, GCE O/L pass rate, vehicle ownership, electricity usage, and safe drinking water facilities were the main reasons for the higher performance. However, compared to other provinces, lower performance was observed in areas such as, provincial inflation, secondary school attainment, and schools with computer facilities.

The Sabaragamuwa Province maintained its rank of fifth position in the SLPI with higher performances in the two sub-indices – Well-Being of the People and Socio-Economic Infrastructure due to improvements in schools density, pupil teacher ratio, road density and safe drinking water facilities. However, lower performance in the Economy and Business Climate sub-index was due to lower per capita GDP, informal sector wages and banking density, compared to other provinces.

The Northern Province recorded the highest growth rate and improved its rank to sixth position in 2011 from ninth position in 2010 mainly on account of an increase in per capita GDP, bank density, road density and schools with English medium classes and computer facilities. Compared to other provinces, lower performance was recorded in GCE (O/L) pass rate and an increase in reported crimes.

The North Central Province was in seventh position and its growth rate declined in 2011. Among the three sub-indices, the Economy and Business Climate sub-index performed better than the other two sub-indices due to improved performance in employment and informal sector wages. Compared with other provinces, North Central Province indicated lower performance in school density, facilities for studying English, road density and safe drinking water facilities, which adversely affected the ranks of the other two sub-indices.

The Eastern Province recorded the lowest growth rate and its relative position declined to eight in 2011 from six in 2010 on account of lower performance in employment, poor household percentage, secondary school attainment, GCE O/L pass rate and telecommunication and computer facilities, comparative to other provinces. All three sub-indices recorded lower positions, while the Socio-Economic Infrastructure ranked the lowest.

The Uva Province rank declined to ninth position and compared to other provinces, its lower performance in the areas of informal sector wages, industrial density, university admissions, GCE O/L pass rate, school density and safe drinking water facilities were the main reasons for the decline. Among the three sub-indices, Economy and Business Climate and Well-Being of the People sub-indices indicated lower performance than the Socio-Economic Infrastructure sub-index.