Govt makes every effort to reduce budget deficit, curtail inflation - IMF

Surekha GALABODA

The IMF welcomes the structure of the budget, tax reforms, BOI reforms as well as plans that are under way to improve the CEB, and CPC said IMF Resident Representative Dr. Koshy Mathai.

Dr. Koshy Mathai.

Dr. Mathai said that the government is making every effort to reduce the budget deficit as well as inflation which is very welcoming.

Delivering the K. Sivagananathan memorial oration titled Prospects for Sri Lanka’s Economy, he said that to keep the macro economy stable it is necessary to reduce the budget deficit, grow export share, increase FDI, develop the corporate bond market, access long-term bank financing and financing of SMEs are needed.

Sri Lanka exports 20 percent to US, 39 percent to EU while only one percent is exported to China and 4 percent to India. Therefore Sri Lanka should reorient its exports to fast growing economies rather than slow growing economies.

Regional integration is a must for development. It is also important to move to exporting of high value goods and services rather than low value goods and services, Dr. Mathai said.

Dr. Mathai thanked the government for emphasising the importance of developing physical infrastructure which is important for the economic growth of the country.

The private sector should be involved in it, he said. Encouraging more companies to list on the CSE as well as developing the corporate bond market are necessary to increase economic growth of the country. At present Rs. 30 bln is in the corporate bond market while in Malaysia it is around 60-70 percent of the GDP.

Access to long-term banking finance and the availability of finance for SMEs are major issues that have to be overcome to achieve a higher economic growth.