Annual Report 2005 - Institute of Policy Studies of Sri Lanka

Background & FundingBackgroundThe Institute of Policy Studies (IPS) was conceived in the mid-1980s as an autonomous institutiondesigned to promote policy-oriented economic research and to strengthen the capacity for medium-termpolicy analysis in Sri Lanka. It was established by an Act of Parliament in December 1988 and was formallyset up as a legal entity by gazette notification in April 1990 managed by a Board of Governors. From itsinception, the IPS was supported through a collaborative project between the Royal Netherlands Governmentand the Government of Sri Lanka under four phases of operations to allow the Institute to gradually diversifyits income and resource base. In the interim, the IPS has been successful in establishing its own EndowmentFund and setting in motion the transition to full financial independence with the formal ending of the fourthphase of operations in December 2004.Operational independence from financial and administrative regulations of the government were very muchpart of the rationale for setting up an independent IPS. Since its inception, the IPS has functioned under thekey ministries involved in economic policy making and implementation in Sri Lanka while enjoyingconsiderable autonomy in setting and implementing its research programme. Its institutional structure hasallowed the IPS to acquire a unique position as an authoritative independent voice in economic policy analysis,working closely with the government, private sector, development organizations and civil society.Since its establishment, there has been a substantial expansion of activities undertaken by the IPS. Thenumber of areas on which it sustains on-going research has expanded significantly with the systematicstrengthening of expertise of its research staff. The expanding research output has been reinforced byprofessional in-house support services in overall finance and administration management and in the provisionof information and resources including the Institute’s own library, publications, information technology, webdevelopment and database services.FundingThe IPS is primarily dependent on the bilateral technical assistance programme funding from theNetherlands government. This funding due to cease in December 2004 was extended under a BudgetNeutral Extension of Phase IV and an amendment to the Contribution Agreement between The NetherlandsMinister for Development Co-operation and the IPS was signed by both parties extending the period of PhaseIV from December 2004 to June 2006.Hence, the Institute is funded by three major sources. These include, funding from Sri Lankan and Dutchgovernments and project funding from contract research. The principal source of revenue for the year is theNetherlands government grant. It finances the core operating costs. The Sri Lankan government provides acounterpart contribution to cover the rent and maintenance of the current premises of the IPS. Additionalearnings are secured from contract research and supplemented by the interest income generated from theinvestment of the IPS reserves.5__________ Annual Report 2005