Koshy calls for growth enhancing reforms in Budget

Saturday, 13 October 2012 00:00 - - {{hitsCtrl.values.hits}}

By Cheranka Mendis

As the Budget nears, the International Monetary Fund (IMF) yesterday called on the Government to concentrate on suitable growth enhancing reforms and concentrate on the ‘alarming’ debt ratio to preserve Sri Lanka’s growth.

Speaking at a pre-Budget discussion organised by the Import Section of the Ceylon Chamber of Commerce, IMF Country Representative Dr. Koshy Mathai said that the recent visit by IMF representatives to Sri Lanka was not for a follow-up loan to the US$ 2.6 billion Stand-By Agreement and that a separate visit would be made to decide on future assistance to the country.

Mathai expressed his satisfaction at the consistency maintained in the 2012 Budget with the visions and goals articulated in the 2011 Budget. He noted that anticipation was that the consistency would be carried out over the next Budget as well.

“Consistency is absolutely important in the overall policy direction. Now it is time for growth-enhancing reforms, that will enhance growth and structural measures that the country has in place. If not in this Budget, we hope to see action regarding this within the next year or two to preserve Sri Lanka’s growth going forward,” he said.

Dr. Mathai pointed out that currently, despite the slowdown in growth and rising inflation, the general perception of the economy remains positive. “Growth is down but still close to 7%, inflation is up but still at single digits, interest rates are up but still lower than the past. There is a fundamental optimism in the overall perspective.”

However, he noted that on the fiscal side, there was cause for concern, adding, “Debt to GDP ratio rate is alarming.”

Listing out the key factors for the local economy, Mathai spoke of the need for serious and sustained reforms, from both expenditure and revenue sides. “With the former, there are areas which the Government can bring under control, however with the latter, the country stands out as the revenue to GDP ratio remains at extremely low levels,” he added.