SL to approach IMF for development funding

Indunil HEWAGE

Sri Lanka is likely to discuss a loan up to one billion dollars with the International Monetary Fund (IMF) if IMF is willing to provide loans for budgetary support and infrastructure development activities in the country, said Treasury Secretary Dr P.B Jayasundara.

Sri Lanka doesn’t need loans from any international donor agencies to build foreign reserves, and our requirement is to obtain international loans to support ongoing mega infrastructure development projects in the country. Dr Jayasundara also said that the IMF cannot find a better partner than Sri Lanka in the region.

“2012 will probably end with a GDP growth rate of 6.5% to 6.75% and our best judgment is that it will not be less than 6.5 % for 2012.

What we are more proud is that the country has been able to keep the inflation down despite the adjustments prevailed during the year and inflation has been kept around 7 % during the year which is a remarkably good story for a country like Sri Lanka which had a double digit inflation for many years,” Dr. Jayasundara said. According to Dr. Jayasundara, agriculture, livestock, manufacturing sectors and power generation activities suffered immensely during the third quarter of 2012 as a result of the severe drought which lasted up to November 2012. As a result, Sri Lanka had to heavily depend on oil imports more than what is required and third quarter growth was moderated to four and half percent that time.

However, Dr.Jayasundara says that even though 2012 ended with floods , the Maha harvest is going to be exceptionally favorable for Sri Lanka and tea, rubber, fruits and vegetable production are also blessed with favorable weather. The country has also witnessed a remarkable turnaround in milk production sector despite the prevailing challenges to expand storage capacity and to create value added products from dairy.

The budget deficit has been targeted to be kept at a 6.2 -6.3 range and this will reflect the government's capacity to adjust even payments if necessary to keep the macroeconomic fundamentals. On that ground Sri Lanka is approaching 2013 with optimism with the economy bouncing back to 7.5 % GDP growth.