Lanka progressing well - International Monetary Fund

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Lanka progressing well - International Monetary Fund
There is always risk in an economy and IMF is happy the way that Sri Lanka is progressing.
The external performance is positive. The reserves position and exchange rate is stable. Overall the external sector is strong, International Monetary Fund Resident Representative Dr. Koshy Mathai said.
"The country is on the right track. The necessary clauses are included in the Technical Memorandum of Understanding (TMU) where adjustments could be carried out," he said announcing the completion of the fifth review of the Stand-by Loan Agreement.
There should be two way flexibility in the exchange rate and the introduction of flexibility in both directions is necessary. However, inflation is picking up. International food prices are on the rise and the flood situation has also contributed in the inflation to move upward.
"Inflation and monetary conditions are at satisfactory levels. However, the Central Bank must keep a vigilant eye. There is no bubble in the property market. The external shocks are managed well.
There could be real growth in the economy that is rebounding. The growth expected for 2011 is seven percent," he said.
Historically the fiscal situation in Sri Lanka is a weak point. However, remarkable improvement could be seen recently. The budget deficit is contracting. The debt ratio will come down to 60 percent from its current 80 percent in four to five years.
The budgetary policies should be focused and implemented to achieve desired results.
Sri Lanka collects very low revenue compared to other countries. The tax reforms and BOI reforms are good moves.
The country is focusing on improving the business environment and also climbing up the ranking. State enterprise balances can be improved which is good for the overall balance.
"The fiscal picture is encouraging. The financial sector is now looking at developing with growth enhancement. Promoting IPOs will augur well for the financial sector. The corporate bond market will also be developed with relevant policies introduced. They are good moves in macro environment", Dr. Mathai said.
There is new economic scenario for Sri Lanka as well as for the world. The most important thing is for the macro economic fundamentals to be strengthened. Sri Lanka needs to focus on its natural strengths," he said.
Asia will take up the economic centre stage. China and India are growing strongly. Sri Lanka needs to re-orient towards more regional integration. The country's economy is bound to grow fast and we are optimistic, he said. "The monetary policy is in the right place. There are no cuts and hikes.
The main focus should be to implement the policy decisions regarding macro targets, tax reforms and state enterprises that had been laid down. The key focus should be to increase revenue," Dr. Mathai said.
Courtesy :Daily News