A visiting International Monetary Fund (IMF) mission in Sri Lanka to review its programme in the country expressed satisfaction over the progress of the Sri Lankan economy.
The mission said today (23) that it could make the necessary recommendation to release the next tranche of US$ 200 million from the Stand-By Arrangement (SBA).
“Overall economic conditions are improving as expected in the last visit, and the economy is likely to show strong growth this year,” the mission led by Dr Brian Aitken said in a statement issued at a press conference today.
The statement said the team was in Sri Lanka to conduct discussions for the fourth review of the SBA in which the country receives US$ 2.6 billion over a period of three years.
“External balances are strong, remittance inflows continue at a high rate, tourism prospects continue to improve rapidly, and gross reserves remain at comfortable levels. We assess the Central Bank’s recent rate cut as appropriate — with bank lending only slowly beginning to rebound, and economic growth still below potential, we see little sign of emerging demand-driven inflationary pressures, and average inflation for the year as a whole is expected to remain in the single digits,” the statement said.
The mission noted in the statement that with budget revenues increasing and expenditure restraint continuing, fiscal performance so far remains consistent with achieving the government’s full-year deficit target of 8 percent of GDP.
Making an assessment of the medium term challenges of the country, the mission observed that the end of the 30-year war has led to a surge in investor enthusiasm, bolstered by the decline in the risk of a short-term balance of payments crisis and future growth prospects have improved markedly.