Lanka successful in meeting growth targets -IMF
Sanjeevi Jayasuriya
Dr. Koshy Mathai
Picture by Sarath Peiris
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Sri Lankan authorities have been successful in meeting the guidelines
laid out by the International Monetary Fund (IMF) in reaching the growth
targets with decrease in inflation, building up reserves, meeting fiscal
and debt ratios. However, the relaxed fiscal policy in the early period
was back inline with original goals, IMF Resident Representative Dr.
Koshy Mathai said announcing the completion of the IMF Stand –By
Agreement programme.
“The SBA is relatively successful and will now move to new kinds of
arrangements, while giving the government space to explore other avenues
of assistance where manifestation of peace dividend could be seen at
present,” he said. The pressure on current account deficit was met by
firm economic policy changes which paid off and the flexible adjustments
stands the economy in good stead, he said.
“We see a future of sustainable economy for Sri Lanka. The
consolidation will take place where the policy adjustments will come in
to effect. We are having discussions on future IMF programmes where
short term assistance is given where necessary,” he said.
The currency movement is not only affected by trade volume but
capital movement as well.
We have seen this pressure in Sri Lanka, but projection on the rupee
movement is very difficult which will largely depend on how sustainable
the capital in flows are and by looking at the underline macro policy
and stability.
There are models to measure overvaluation of a currency. It is
difficulty to say whether it is over- valued or not.
We have affirmation for a flexible policy framework from the
authorities on the rupee valuation. There is a policy framework to see
the level of rupee as the market is going to be developed over time to
progress naturally.
The measures taken by authorities have a role to prevent market
manipulation and speculation is not a bad thing. However, it is
important to have right exchange rate levels by removing restrictions
for more flexibility, Mathia said.
The executive board of the IMF completed the eight and final review
of Sri Lanka’s economic performance under a programme supported by a
Stand- By Agreement (SBA).
The completion of the review enables the immediate disbursement of an
amount equivalent to SDR 275.6 million (US $ 415 million) bringing total
disbursements under the arrangement to US $ 2.5 billion.
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