Growth, inflation and unemployment:
- Economic growth increased to its highest level of 8.3% - the first time the country recorded above 8% growth in two successive years.
- Per capita income increased to US dollars 2,836 from US dollars 2,400 in the previous year.
- Inflation remained subdued at single digit levels for the third consecutive year.
- Unemployment declined to 4.2%, the lowest level recorded thus far.
- Substantial improvements in youth unemployment.
External Sector
- Growth of exports, which was at 22.4% was far outpaced by the growth of imports at 50.7%
- Trade deficit widened sharply to 16.4% of GDP.
- Tourist arrivals crossed 850,000 with earnings recording US dollars 830 million.
- Workers’ remittances reached US dollars 5.1 billion
- Current account deficit remained substantially higher at 7.8% of the GDP compared to the average deficit of around 3.1% over the last ten years.
- Foreign direct investments in the country exceeded US dollars 1 billion for the first time.
- The balance of payments recorded a deficit of US dollars 1.1 billion.
- Gross official reserves by year end were US dollars 6.0 billion compared to US dollars 6.6 billion as at December 2010.
- The rupee depreciated by 2.6% against the US dollar by year end.
Fiscal Sector
- Emphasis on fiscal consolidation continued in 2011.
- A shortfall in revenue was reflected in the decline in the revenue to GDP ratio to 14.3% from 14.6% in 2010.
- Total expenditure and net lending was maintained at 21.4% of GDP.
- Overall fiscal deficit was 6.9% of GDP, marginally above the targeted level.
- Government debt to GDP ratio fell to 78.5% from 81.9% in 2010, the first time in nearly 30 years that the ratio was lower than 80%.
- Government issued the fourth international sovereign bond, amounting to US dollars 1 billion.
Monetary and Financial Sector
- Key policy interest rates were reduced in January 2011 to enhance investments by the private sector.
- The Statutory Reserve Ratio was raised by 1 percentage point to 8% in April in order to permanently absorb a part of excess liquidity.
- Monetary expansion, at 19.3% on average, continued to remain above the targeted level.
- Market interest rates were broadly stable during the first three quarters of the year but began increasing thereafter.
- Stability of the financial system continued to be well safeguarded.
- A new Finance Business Act was enacted while several new Directions were issued.
- Non-performing loan ratios declined over the year.
- Banking system remained well capitalised despite a decline in the capital adequacy ratios.
- Further progress was made towards improving access to finance with the expanding branch network of financial institutions.
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