Lanka's economy on positive path - Dr. Koshy Mathai
Sri Lanka's economy is on a positive path though the growth rate has
slowed down and inflation is high said International Monetary Fund (IMF)
Resident Representative Dr. Koshy Mathai. He said that though the
economic growth rate is low, the interest rates and inflation are higher
than last year. The economy is now stable and on a recovery path. The
macro economy is quite good and there is optimism in the medium term.
“The Current Account deficit has been adjusted even though there has
been a delay.
The Government has been committed to bring in flexible policies and
has step back from interventions allowing the monetary system to evolve
naturally,” Dr. Mathai said.
Dr. Mathai was speaking at a pre-budget seminar organised by the
Ceylon Chamber of Commerce recently.
“The debt to GDP is yet around 80 percent. It has declined from over
100 percent a few years ago. Unlike other countries Sri Lanka has not
reduced its deficit by introducing unfriendly policies such as freezing
expenditure,” he said.“Sri Lanka's financial markets have not grown as
in other countries. Consolidation is vital to keep deficit down. Fiscal
discipline is essential to bridge the deficit which is currently under
pressure,” Dr. Mathai said.
He said that the Government should continue on a path of gradual
deficit reduction with policies to prevent shocks to the economy. A team
is expected in Sri Lanka to hold discussions on an on-going program
following the completion of the 2.5 b US dollar Stand-by Arrangement
Facility this year.
Sri Lanka has expressed interest in having an ongoing ‘surveillance’
program with the IMF which may involve further contingency funds of
around 500 m US dollars.
Dr. Sirimal Abeyratne of the Department of Economics, Colombo
University, who led the panel discussion said that the 2013 Budget will
be a huge challenge due to revenue and expenditure issues. “Curtailing
the Budget deficit is a daunting task. Yet it should be done to boost
growth and not to please the IMF”, he said.
- LF
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