Sri Lanka should keep policy on hold, make structural changes: IMF

Monetary Stance

Sept 25, 2013 (LBO) – Sri Lanka should keep monetary policy on hold but make structural change to boost growth, an International Monetary Fund official said. Todd Schneider, head of a monitoring mission to Sri Lanka said external conditions have worsened with impending Federal Reserve action, and budget revenues were flat though inflation was now moderate.

“In the light of risk facing Sri Lanka, the mission recommends that policy rates remain on hold which will also give time to assess the impact of recent easing,” Schneider told reporters.

“Efforts to boost growth should focus on structural measures, such as tariff reform, enhanced revenue mobilization to support capital expenditure, and improvements to the general business climate.

The IMF estimated that the economy would grow by 6.5 percent this year with uncertainty over whether the first half momentum could be maintained for the rest of the year.

Update I