Low interest rates to stay - CB Governor
Central Bank Governor Ajith Nivard Cabraal said that ‘encouraging’
inflation figures mean he plans to keep the current stance on interest
rates, after policy-makers last month kept borrowing costs at a
five-year low.
“It’s too early to tell, whether higher rates will be needed this
year, Cabraal said in an interview with Bloomberg Television, speaking
from Bloomberg’s Washington office yesterday local time. The central
bank’s current policy will stay for now, he said.
Sri Lanka’s policy-makers are seeking to stoke growth after the end
of a civil war in 2009, a development that’s helped the nation’s stock
market become one of the world’s best performers in the past year.
The country is also seeking a loan disbursement from the
International Monetary Fund to help bolster the South Asian economy’s
development.
Cabraal said he’s very positive, that the IMF team will see the
country is on the right track, and that the fund understands why 2009
fiscal targets were missed. Highlighting that foreign-exchange reserves
have exceeded targets, he said I don’t see a risk for the nation’s
sovereign-debt ratings.
Consumer prices in the capital, Colombo, rose 5.8 percent in April
from a year earlier, according to the Statistics Department. Inflation
has averaged 12.6 percent in the five years through 2009. The Central
Bank expects the economy to grow 6.5 percent in 2010, the fastest pace
in three years.
The Central Bank of Sri Lanka left the reverse repurchase rate
unchanged at 9.75 percent, its lowest level since August 2005, and
maintained the repurchase rate at 7.5 percent, according to a Central
Bank statement on April 22.
Sri Lanka plans to nearly halve its budget deficit in the next three
years as the end of the island’s 26-year civil war spurs economic growth
and boosts revenue, Treasury Secretary P.B. Jayasundera said April 7.
The government aims to narrow the budget shortfall to 5 percent of gross
domestic product by 2012 from 9.7 percent in 2009 and an estimated 7.5
percent in 2010, Jayasundera said. Sri Lanka was supposed to reduce its
budget deficit to 6 percent of GDP in 2010 from 7 percent in 2009 as
part of a $2.6 billion bailout package the IMF gave the South Asian
nation in July last year to help avert a foreign-exchange crisis.
The IMF said in February it will decide whether to grant Sri Lanka a
third loan tranche of about $330 million after the government presents
its 2010 budget. Fitch Ratings said in March that the island’s credit
rating may be lowered if the government fails to narrow its budget
shortfall.
An IMF mission was scheduled to visit Sri Lanka this week to discuss
the 2010 budget of President Mahinda Rajapaksa’s newly elected
government, according to remarks by Koshy Mathai, the fund’s resident
representative, in Colombo on May 4.
Sri Lanka’s foreign-exchange reserves are at $5 billion, after
dipping to $1.27 billion before the IMF rescue package was approved,
according to Bloomberg data.
|