June 05, 2010 (LBO) – Sri Lanka is aiming to push its speculative sovereign rating to investment grade by 2013 by fixing government finances, keeping inflation low and growth high, Central Bank Governor Nivard Cabraal said. Sri Lanka was downgraded a notch from its original rating as the country went on a deficit spending and state expansion drive after 2004 pushing inflation close to 30 percent with excessive money printing to finance deficits.
But monetary policy has improved in recent years with Cabraal clamping down on inflation from 2007.
“I was not the most popular governor,” Cabraal said. “But today people have realized how important it is to have low inflation. I intend to keep it low for the long term.”
Last year seven state institutions made operational losses of more than one percent of gross domestic product, while the budget was in deficit by 9.8 percent excluding grant financing and 10.2 percent with grant financing.
Sri Lanka’s national debt is over 80 percent of GDP. Cabraal said economic management would be improved to push the rating up and make Sri Lanka more attractive to investors and growth would be kept above 6.0 to 6.5 percent a year.
“We will concentrate on steady and sustai