This paper provides a quantitative assessment of the likely economy-wide impacts of agricultural productivity improvements in Sri Lanka. A static multi sector Computable General Equilibrium (CGE) model of the Sri Lankan economy using the input-output table for year 2000 is employed highlighting the agricultural sector and its interactions with other production sectors in the economy. The results indicate that increasing agricultural productivity leads to positive economic benefits. However, productivity improvements would lead to reduction in agricultural employment, which in turn may affect the real income of households in agricultural provinces in the short run.