Dr. Koshy Mathai, IMF’s Resident Representative in Colombo did not disagree with a statement made by a reporter on Thursday, that the reason for the delay in obtaining the Fund’s SDR 1,653.6 million standby arrangement in 2009 was due to the Government’s alleged human rights abuse and political considerations (see also the business page lead).
He however said that those were no longer issues. Mathai further said that the Government didn’t meet the IMF’s net foreign reserves (NFR) target (ie reserves built up from exports, remittances and such like, as opposed to from foreign commercial loans and investments in Government Treasury Bonds and Bills) for December.
He said that originally the IMF target for NFR was US$ 1¾ billion, which was subsequently uplifted to US$ 4¼ billion.
Mathai said that the reason for the Government not meeting this target was the contraction of the tenure of an Iranian oil bill which it had to settle from eight to five months.
He further said that though Government fiscal data for December was unavailable, all indications were that those targets had been met. The Government said that the budget deficit contracted to 8% last year-a requirement of the IMF.
Government also pledged to bring the deficit down to 6¾% this year and to 5¼% in the next.
Mathai expected growth to pick-up, but not to the 8% levels as projected by the Government. “Even during the war years the economy grew in the 5-6% range,” he said.
Mathai further said that as growth was in Asia, the country should look beyond its traditional markets, the West, which absorbs 60% of the country’s exports, whereas growing economies such as India absorbs only 4% of Sri Lanka’s exports and China 1%.
With the West hit by the recession and the consumer there more focused on consolidation instead of consumption, Sri Lanka should search for other markets for its exports, he said.