Sri Lanka progressive yet challenges remain, Amunugama tells IMF, WB annual Meeting

Tuesday, 15 October 2013 00:05 -     - {{hitsCtrl.values.hits}}

Despite encouraging economic growth and low inflation, Sri Lanka is facing challenges in domestic economic management and meeting development targets due to the global economic uncertainties and high volatility in financial and commodity markets. Addressing the Annual Meeting of the International Monetary Fund (IMF) and the World Bank (WB) Group held in Washington DC on Friday (11 October), Governor of the World Bank Group and the IMF for Sri Lanka, Senior Minister Dr. Sarath Amunugama highlighted the recent economic developments in Sri Lanka. The Minister noted that despite a challenging global and domestic environment, the Sri Lankan economy grew by an encouraging 6.3% during the first half of 2013 with a 6.8% growth in the second quarter while keeping the inflation contained in single digits. He explained that the tight monetary policies adopted in early 2012 to strengthen macroeconomic stability, agricultural losses, and subdued global economic activity had an impact on the growth but expected the economic activity to accelerate during the second half of 2013. The fiscal management remained challenging this year with slowdown in imports affecting the revenue generation, although public expenditure was maintained in line with targets, Dr. Amunugama noted. However, the Government is committed to contain the fiscal deficit to a targeted 5.8% of GDP in 2013. According to the Senior Minister, one of the perennial problems the country facing is the financial losses at the two key State-owned enterprises, namely the Ceylon Petroleum Corporation (CPC) and the Ceylon Electricity Board (CEB). Finally, as a result of price adjustments, these two enterprises have now turned around to report operational profits, Dr. Amunugama revealed. He said that doubling of per capita income to US$ 4,000 by 2016 is one of the key goals of Sri Lanka under the ‘Mahinda Chinthana’ policy and in achieving the goal Sri Lanka has embarked on various programs to develop infrastructure, promote investments and improve the business climate while strengthening macroeconomic stability. Speaking of regional development, Dr. Amunugama said the Government has paid special attention to develop conflict affected Northern and Eastern Provinces and the income levels of those provinces are growing fast. “We have made great progress in post conflict resettlement, reconstruction, and rehabilitation and in the reconciliation process including a recent election in the Northern Province,” he said. While appreciating World Bank Group’s support given to Sri Lanka to achieve the Millennium Development Goals and underscoring Sri Lanka’s impressive progress in meeting those goals ahead of time, the Minister called on the global lenders to increase development financing for relatively larger infrastructure projects in developing countries and expressed support to new initiatives by the World Bank Group as well as other organisations to increase access to large scale development financing. Apprising the global lenders on Sri Lanka’s challenges, Dr. Amunugama acknowledged that Sri Lanka needs to strengthen exports to increase revenue generation. “We need to create more fiscal space to support growth enhancing public investment by strengthening revenue generation. At the same time, we have to implement appropriate reforms to strengthen our export base, especially focusing on regional trade, to create comfortable external buffers,” he said.