Indunil HEWAGE
The International Monetary Fund is optimistic of Sri Lanka’s ability to meet the set targets for the economy this year.
The IMF stated that appropriate measures to increase liquidity management tools at the Central Bank’s disposal will assist in maintaining its control over monetary conditions.
“The monetary policy will need to be vigilant about the possible second-round effects from higher prices on core inflation and strike the right balance between supporting economic growth and preventing excess liquidity from fuelling inflationary pressures. Allowing sufficient two-way flexibility of the exchange rate will help support the external position and meet the reserves target. The IMF said reforms in the financial sector would focus on fortifying the resilience of the sector by enlarging the scope of financing options existing to the private sector.
It would definitely increase the depth of the corporate bond market whilst enhancing the functioning of the stock market.
International Monetary Fund Country Representative Dr Koshy Mathai said in a bid to make sure the durability of fiscal adjustment, it is vital to reform the two state energy enterprises and bringing their combined operating balance to zero in 2011.
To this end, permitting modifications of domestic prices to reflect fluctuations in international fuel prices would be a decisive factor. However, Dr Mathai said the increase in the fuel prices would have some sort of impact on the Sri Lankan economy.
“However it seems inflation trends are under control in the country,” he said.
Dr Mathai said financial sector reforms will continue to focus on strengthening the resilience of the sector and expand the scope of financing options available to the private sector by increasing the depth of the corporate bond market and improving the functioning of the stock market.
“The recently reformed tax policies would also be a basis for real growth in revenues in the country,” he said.
source - www.dailynews.lk
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