This report on poverty assessment in Sri Lanka establishes that the development story in Sri Lanka is one of mixed success. Whilst the country is on par with middle income countries and Millennium Development Goals timetables for universal primary school enrolment, gender parity in primary and secondary school enrolment, and universal provision of reproductive health services, consumption income poverty persists and the poor continue to face basic welfare challenges, such as malnutrition. A number of interrelated constraints prevent access by the poor to opportunities in more dynamic sectors of the economy. In poor rural areas and the estates, economic and geographic constraints include inadequate connectivity to markets and growth centres, lack of electricity and transport facilities and poor quality schools. In urban areas, some restrictions include inadequate access to clean water, electricity, sanitation and quality housing. At the household level, the report assesses the cyclical nature of poverty traps caused by low levels of education, poor nutrition and underemployment (largely associated with the informal sector). Population in the estates, the north and the east, and in tsunami-affected coastal areas, are more likely to fall into the poverty trap cycle due to historical disadvantages or recent events such as civil conflicts or natural disasters. This report by the World Bank is intended to add to the debate on and understanding of poverty and inequality in Sri Lanka.