The first Sinhalese arrived in Sri Lanka late in the 6th century B.C., probably from northern India. Buddhism was introduced circa 250 B.C., and the first kingdoms developed at the cities of Anuradhapura (from circa 200 B.C. to circa A.D. 1000) and Polonnaruwa (from about 1070 to 1200). In the 14th century, a south Indian dynasty established a Tamil kingdom in northern Sri Lanka. The Portuguese controlled the coastal areas of the island in the 16th century and the Dutch in the 17th century. The island was ceded to the British in 1796, became a crown colony in 1802, and was formally united under British rule by 1815. As Ceylon, it became independent in 1948; its name was changed to Sri Lanka in 1972. Prevailing tensions between the Sinhalese majority and Tamil separatists erupted into war in 1983. After two decades of fighting, the government and Liberation Tigers of Tamil Eelam (LTTE) formalized a cease-fire in February 2002 with Norway brokering peace negotiations. Both the LTTE and the government unofficially abrogated the ceasefire and violence between the LTTE and government forces intensified in 2006, but the government regained control of the Eastern Province in 2007. The government officially withdrew from the ceasefire agreement in January 2008 and by May 2009, the remnants of the LTTE had been defeated.Since the end of the conflict, the government has enacted an ambitious program of economic development projects, many of which are financed by loans from the Government of China. In addition to efforts at reconstructing its economy, the government has resettled more than 95% of those civilians displaced during the final phase of the conflict and released the vast majority of former LTTE combatants captured by Government Security Forces. Progress continues to be made on more contentious and politically difficult issues such as reaching a political settlement with Tamil elected representatives and holding accountable those alleged to have been involved in human rights violations and other abuses during the conflict.
Sri Lanka is attempting to sustain economic growth while maintaining macroeconomic stability under an IMF program. The government's high debt payments and bloated civil service cadre, which have contributed to historically high budget deficits and low tax revenues, remain a concern. Government debt is about 77% of GDP and remains among the highest of the emerging markets.The new government in 2015 drastically increased wages for public sector employees, which boosted demand for consumer goods but hurt the overall balance of payments and reduced foreign exchange reserves.Tourism has experienced strong growth during recent years following the resolution of the government's 26-year conflict with the Liberation Tigers of Tamil Eelam. The government has been pursuing large-scale reconstruction and development projects in its efforts to spur growth.