IMF revises Sri Lanka’s 2018 growth to ‘below 4%’

Monday, 1 October 2018 01:33 - - {{hitsCtrl.values.hits}}

REUTERS: The International Monetary Fund (IMF) on Friday said Sri Lanka’s economic growth is projected to remain below 4% in 2018, revising down its own estimate of 4% in June.

Economic growth has been a major concern to the nation after it recorded a 16-year low of 3.3% last year due to tight monetary and fiscal conditions, droughts and floods.

After concluding two weeks of talks on the fifth review of Sri Lanka’s economic program supported by a three-year $ 1.5 billion loan, the IMF said the macroeconomic performance has been mixed in the first half of 2018, with growth recovering gradually and inflation stabilising in the mid-single digits.

“Reforms need to accelerate to strengthen the Sri Lankan economy’s resilience to domestic and external shocks, given still significant vulnerabilities,” IMF Mission Chief Manuela Goretti said in a statement.

“In the face of greater market volatility in emerging markets, the authorities have maintained a strong policy stance with prudent monetary policy and further fiscal consolidation.”

It also said that June-end foreign exchange reserve accumulation and tax revenue targets fell short of the IMF loan targets “due to the weaker economic environment and delays in policy implementation”.

The Central Bank has revised down the 2018 growth target in August to ‘unlikely’ to be more than 4%’ from an earlier 5%.

The economy is now under pressure from rising US interest rates, which has resulted in foreigners withdrawing funds from emerging markets.