Oct 06, 2010 (LBO) - Sri Lanka has met key quantity targets in September for foreign reserves, local borrowing and money creation limits, under a deal with the International Monetary Fund, the Central Bank said.
Sri Lanka's budget deficit, which is the key source of instability to the economy, is monitored under a local borrowing ceiling (net domestic financing or NDF) set at 279,600 billion rupees. No figures were given for the actual achievement, in the statement.
Inflation is kept in check with a target for money creation defined as reserve money, or the narrowest form of money supply through which final transactions in the economy is cleared was set at 349.2 billion rupees for end September.
Central Bank data, released separately showed that reserve money was 338.4 billion rupees for September 30.
The IMF has given the central bank a free hand with monetary policy, given its post-2007 record for tight policy. But analysts have raised concerns about ad hoc monetization of government debt in 2010.
For September 2010, Sri Lanka was no longer required to collect foreign reserves and in fact is allowed to lose up to 165 million dollars from the beginning of the year volume under a net international reserve (NIR) target set under the IMF program.
The central bank said an IMF mission is expected to arrive in Sri Lanka in November to for a review of the economy.
Sri Lanka has not yet released the IMF staff review of the economy was given to the board of the lender to support the release of a decision to disburse 213 million dollar tranche under a 2.5 billion dollar program.
In contrast, a staff report for Pakistan under its program, dated September 10 was made public on September 20. An October 2009 IMF economic report was released only in August 2010, almost a year later.
source - www.lbo.lk
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