CB road map to check inflation rate

The Central Bank (CB) Governor, Ajith Nivard Cabraal said that the bank has launched a road map for monetary and financial sector policies to bring down inflation to a single digit by the end of this year.

Cabraal was addressing the launch of the 57th annual report of the CB on Friday which was released one month prior to the specified date.

The heavy monetary pressure and lending during 2006 resulted in a sharp increase in inflation. Tight monetary policy measures supplemented with certain prudential measures contained the demand driven inflation to some extent.

The strong monetary policies introduced early this year will lower the inflation rate, he said.

Sri Lanka's inflation rose to an alarming level of over 20 percent, the highest recorded so far in the region. Financial analysts forecasts that the inflation rate would further increase if no effective monetary policies are introduced.

Cabraal said the monetary policy thrust was directed towards curbing the rising inflation pressure and expectations.

Despite a challenging year of terrorist attacks natural disasters, surge in international oil prices and other setbacks the economy recorded a growth rate of 7.4 percent, the highest after 30 years. The economic growth, reduction in unemployment, satisfactory flow of FDI, increased state revenue and per capita income are indicators of an economy on a solid growth path initiated under the Mahinda Chintana's 10-year development plan, Cabraal said.

He said that the 10-year development plan will enable the country to achieve the 8 percent GDP growth rate, develop all vital sectors, promote industrial and agricultural growth, slash inflation and bring economic prosperity to the nation. Outlining the action plan for this year he said the sectors such as tea, apparel, tourism, SMEs, and earnings of foreign remittances will be transformed into viable million-dollar earners.

President Mahinda Rajapaksa said the country was able to achieve the highest economic growth rate since 1978 due to the effective and efficient planning of the Ministry of Finance and the Central Bank.

He commended the achievements made in increasing the percapita income from US $ 1000 to 1,355 and the progress made in the Maga Negauma and Gama Neguma programs under the 10-year development plan.

The participation of the President in the launch of the CB annual report added significance to the event since it was the first time that a state leader was present on such an occasion.

LF