IMF impressed by SL economic growth

By Deepal V. Perera in Washington DC

The International Monetary Fund (IMF) yesterday stated that in the face of the global downturn, the performance of the Sri Lankan economy has been impressive.

“The Sri Lankan economy suffered a lot during the conflict days and now things are different. Foreign capital is coming to Sri Lanka after a long period of conflict,” IMF Deputy Managing Director Naoyuki Shinohara told the Daily FT. Commenting on foreign investments to Sri Lanka, Shinohara said that the level of foreign capital coming to the country was still low, but insisted that there was huge potential.

“Sri Lanka needs to improve its business environment further, but we are satisfied with the way the economy is heading.”  The Deputy Managing Director also noted that the seventh review of the Stand-by Agreement was expected to conclude at the end of the year.

“One of the areas we are looking at is the exchange rate mechanism, where we see that there should be more flexibility in its operation. We are closely discussing the issue with the Central Bank of Sri Lanka.”

Meanwhile, the Asian and Pacific Department of the IMF analysing Sri Lanka’s economy said that the country’s GDP growth for 2011 was expected to be between seven to eight per cent.

IMF Director of the Asia and Pacific Department Anoop Singh said that Sri Lanka’s inflation was at moderate levels and investments were coming to Sri Lanka. “We’ve seen investment come into Sri Lanka. We have had a programme supporting these policies. This programme continues through May of next year. I think that overall, a lot has been done.”

He pointed out that Sri Lanka had introduced new fiscal reforms to broaden the tax base, remove exemptions and bring these in line with international standards. He expressed confidence in the Government and the Central Bank to carry forward these reforms.

“We have just returned from discussions in Colombo. We will continue these discussions for the current review while they are here in Washington. Our programme is in force; it continues through next May. We have a couple of more reviews left of that programme and we are working with the Government to address the pressures that arise as Sri Lanka recovers from the events of the last so many years.”