‘IMF agrees to flexible regime’ | Sunday Observer

‘IMF agrees to flexible regime’

The International Monetary Fund (IMF), agreeing to be flexible, and allowing Sri Lanka to adjust fiscal targets, is a welcome move which will help the market to adjust by itself, former Central Bank Deputy Governor W.A. Wijewardena said.

“The decision by the IMF will help bring flexibility to the market,” he said, adding, that right now there is no prospect of the Central Bank revising interest rates, because of the problems facing the economy.

He said such decisions should be made in the light of the future (prospects) and not merely taking the past into account.

The IMF, according to Central Bank Governor Dr. Indrajit Coomaraswamy had agreed to a flexible regime in revising Sri Lanka’s fiscal targets as envisaged for the year.

The government concluded discussions with the IMF last week to resume the Extended Fund Facility program that came to a halt following political changes that took place in October.

An IMF team is due to visit Sri Lanka next month to continue discussions on the US$ 1.5 billion EFF program that was inked in mid 2016.

On achieving the other economic targets such as cubring the budget deficit Wijewardena said this would be an uphill task for the government facing an election year. “I do not think we could achieve 5% economic growth this year as exports and investments are not in favour of Sri Lanka. My feeling is that we would end the year with 3.5 to 4 % economic growth this year,” he said. The Port City and other mega development projects will take time to deliver results. Unless the government manages economic affairs prudently, there is no prospects of a brighter future for Sri Lanka. Populist budgets will help win elections but not growth prospects.

The Central Bank has forecast economic growth to be around 4% in 2018. However, the World Bank and IMF projected growth to be below 4 percent.