Sri Lanka faces balance between inflation and growth: IMF

Apr 18, 2011 (LBO) – Sri Lanka faces a balance between inflation and growth, a top International Monetary Fund official said as prices continue to rise and the Central Bank has taken the first steps to tackle loose monetary policy. Anoop Singh, director of IMF’s Asia and Pacific department said that Sri Lanka has been affected by commodity prices, food prices and energy prices and core inflation in Sri Lanka seems to be within the target of authorities.

Balance

“Having said that, it is true that credit growth in Sri Lanka has been high,” Singh said.

“And therefore, the central bank does face an important balance in how it achieves the growth targets it has in mind but ensures that the food and energy and other commodity prices do not feed into core inflation.”

Credit growth in January was 30 percent from a year earlier.

Sri Lanka only raised fuel prices on April 02, but inflation is March was already at 8.6 percent. Growth was at a blistering 8.0 percent in 2010 and the Central Bank is expecting the economy to grow 8.5 percent.

Unemployment in Sri Lanka is now at a record low of 4.5 percent.

IMF’s Sri Lanka representative Koshy Mathai told reporters earlier in the month t