Govt. goes for graceful growth!

Thursday, 6 December 2012 01:28 - - {{hitsCtrl.values.hits}}

Those wishing for double digit growth or a repeat of the record 8% rise will have to wait a bit longer, with Central Bank Governor Nivard Cabraal on Tuesday implying that in the medium term, the focus is to grow gracefully.

“Sri Lanka has the right ingredients to grow at 8% or more but we are not being overambitious and the original 8% growth target will be revised to 7 and 7.5% in the medium term due to global conditions,” Cabraal said, suggesting that the Government is keen to avoid an overheating of the economy as experienced with 8% growth achieved during the past two consecutive years.

Cabraal made this remark in response to a question as to how CB would bolster the country towards achieving a $ 4,000 per capita income whilst having a tight monetary policy, at the Sri Lanka Institute of Directors (SLID) organised Regulator's Forum.

GDP growth for 2012 has been lowered to 6.5% or 7% due to the impact of external shocks, the drought and also floods this year.

The CB Chief admitted that the tight monetary policy was aimed at curtailing growth or further overheating, whilst a relaxation would fuel inflation. “We have struck a fine balance and are satisfied with the progress of the policy measures taken so far. Depending on the progress of containing inflation, we might relax our stance,” Cabraal said, adding that the Monetary Board is aware of the impact of monetary policy management.

“We will come up with our projections in the presentation of Central Bank’s Roadmap for 2013 and beyond next month,” Cabraal revealed.

He also maintained that despite temporary setbacks, the Government has made a commitment to eradicate poverty, apart from achieving a $ 4,000 per capita income by 2016. “The masses now have a clear idea about the economic direction of the country,” he said.

“The ‘Mahinda Chinthana’ vision addresses challenges towards realising this goal,” Cabraal said, adding that equitable growth is being aimed via placing strategic projects under the five hubs at various parts of the country and a bottom-up approach via the ‘Divi Neguma’ program.

“I am the first to admit that not everything is perfect, but there has been progress and steps have been and will be taken on outstanding issues since the Government has given serious attention to those,” Cabraal emphasised.

CB Chief also said that graduation to an upper middle income country provided both new challenges and opportunities and the private sector needed to be ready.

In response to a question whether governance and political issues were drowning the focus on the $ 4,000 per capita goal, Cabraal said the private sector need not get excited as long proper process is ongoing to ensure checks and balances between the Executive, Legislature and the Judiciary in a country.

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