IMF: Rebuilding to pressure Sri Lanka ’05 fiscal outlook

Although the post-tsunami reconstruction effort in Sri Lanka will help domestic economic growth, it may affect the country’s fiscal outlook, the International Monetary Fund said. Although the post-tsunami reconstruction effort in Sri Lanka will help domestic economic growth, it may affect the country’s fiscal outlook, the International Monetary Fund said. “Lower tourism receipts and a reconstruction-related surge in imports are expected to widen the current account (budget) deficit by almost 2 percentage points of gross domestic product relative to pre-tsunami projections,” the IMF said on its Web site.

The IMF expects Sri Lanka’s budget gap to widen to 9.6% of GDP in 2005 from a pre-tsunami deficit target of 7.5%. If that happens, the deficit will be wider than last year’s 8.2%.

The IMF also said the island mightn’t meet its budget deficit target because of “higher current and capital outlays and a marginal adverse impact on revenues.”

Sri Lanka’s government has estimated the cost of rebuilding after the Dec. 26 devastating tsunami – which lashed the country’s southern and eastern coastlines – at $2 billion. A large part of the funds are expected to be s