Growth to slow down in 2012 –Central Bank
Sri Lanka’s Central Bank (CB) said today (Monday) the growth forecast for this year would slow down to 7.2% as it looks to reduce its budget deficit. Growth in 2011 was reported at 8.3%.
CB Governor Ajith Nivard Cabraal said at the presentation of 62nd Annual Report to the President Mahinda Rajapaksa (who is also the finance minister) in Colombo that they expect a slowdown in the growth forecast compared to achieving over 8% in the past two consecutive years.
He pointed out that following recent interventions in the external sector, the Central Bank is targetting a balance of payments surplus of US$1.2 billion.
Reserves that sank in 2011 from US$8 billion to US$6 billion is expected to increase to US$7.9 billion this year following recent measures like interest rate hikes, fuel price increases, tax increases and imposing a credit ceiling for banks.
The Annual Report 2011 highlights that inflation remained at single digit level for the third consecutive year in 2011; fiscal deficit at 6.9% of GDP; decline in debt to GDP ratio to 78.5%; trade deficit reached US$1.1billion; stability maintained in financial sector; earnings from exports up by 22.4%; import expenditure increased to 50.7%; revenue to GDP ratio dropped to 14.3%.
Mr. Cabraal observed this year would be a challenging one due to the global issues of sanctions imposed on oil certain exporting nations. (SD)