The fourth review of the Sri Lanka Stand-by Arrangement (SBA) was successfully completed by the International Monetary Fund (IMF). The fifth tranche to the value of around US dollars 212.5 million has been disbursed by the IMF on September 24. With this disbursement, a total of US dollars 1,275 million has been received thus far by Sri Lanka on account of the SBA facility approved in July 2009, Central Bank said.
After reviewing Sri Lanka’s economic performance under SBA International Monetary Fund (IMF) stated that the country’s economic conditions are improving and shows strong growth for this year.
“Sri Lanka’s performance under the program has been satisfactory.
Overall economic conditions are improving, and the economy is likely to show strong growth this year on the back of improved fundamentals and political stability,” IMF Executive Board Deputy Managing Director and Acting Chair, Murilo Portugal said.
Sustaining high, socially inclusive growth will require substantially higher levels of private investment, underpinned by broad-based structural and financial sector reforms. “The government’s financial sector reform agenda is on track. Further reforms include putting in place a deposit insurance system, establishing a regulatory framework for private sector pensions and deepening capital markets, which will facilitate private investment,” he said.
Fundamental tax reform, including reform of the investment promotion regime, is central to achieving the government’s budget deficit reduction targets while creating the fiscal space for much-needed reconstruction and infrastructure investment, as well as social spending. In this regard, the 2011 budget will be key to demonstrate the government’s continued commitment to the program’s goals.
“Further improvements in monetary policy formulation will provide useful support for macroeconomic stability.
The Central Bank is now in a position to move gradually toward a flexible framework that targets inflation more directly. The recent introduction of more exchange rate flexibility will support such a transition while also helping to maintain competitiveness”, he said.
source - www.dailynews.lk
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