For a country crippled by bloody civil war, Sri Lanka has seen dramatic progress in privatization over the last three years. Even as bombs blew up the heart of Colombo's business district in October 1997 - an area housing the central bank, the Colombo stock exchange, the Securities Exchange Commission and the Bank of Ceylon - the country earned record revenues from privatization. The sale of the country's telecom monopoly, its second-largest development bank, half a dozen small state companies and several plantation companies, raised SLR22.5 billion ($336 million) in 1997, contributing 11.5% of total government revenue. The budget deficit for 1997 fell to 7.9% from 9.4% in the previous year, no mean achievement for a country that spends around 5% of its GDP on security.
Last year the steady gains continued, despite a depressed stock market that was rocked first by the east Asian crisis and then by the Russian meltdown. Five offers of sale of government shares in tea and rubber plantation companies were oversubscribed and raised SLR239 million. Some 13 of the 23 regional plantation companies are now listed on the Colombo stock exchange and six more are expected to float this year.