Sri Lanka’s economy to rebound this year, says CB Governor

Sri Lanka’s current US$ 67 billion economy is expected to grow 7.8 per cent this year, with an inflation target of between 4- 6 per cent and a lower interest rate regime, Governor of the Central Bank Ajith Nivard Cabraal told a packed audience of ministry secretaries, senior government officials, bankers, heads of finance companies and top businessmen at a forum convened to announce the monetary and financial policies for 2014 in Colombo on Thursday.

He noted that the CB’s communication policy and delivering on projections will continue to play a key role in managing expectations and the bank will continue to provide information to all stake holders in an effective manner. For this purpose the CB Governor will be on twitter with immediate effect.

The balance of payments surplus is seen more than doubling to $ 1.5 billion this year from an estimated $ 700 million last year as a result of the external sec- tor development.

Mr. Cabraal said that the Sri Lankan rupee was able to face the global market turmoil effectively with minimal Central Bank intervention. By the end of 2013 the Rupee depreciated by 2.7 per cent against the US dollar, 4.7 per cent against the Sterling Pound and 6.8 per cent against the Euro. The Rupee appreciated by 10.2 per cent against the Indian Rupee, 13.3 per cent against the Australian dollar and 18.8 per cent against the Japanese yen.

Gross official reserves were maintained at healthy levels equivalent to 4.5 months of imports compared to the internationally accepted norm of 3 months.

Referring to the banking sector performances, he noted that on the strength of their balance sheets, the banks raised $ 1.54 billion in 2013 ($ 973 million in 2012) through foreign borrowings.