Sri Lanka’s Central Bank calls for better fiscal policies to maintain stability

Apr.27 (LBO) – Sri Lanka’s Central Bank has called for better fiscal policies and continued reforms to maintain growth and economic stability, in its annual report on the country’s economic performance. The Bank said Thursday the country grew by 6 percent in 2005, a day after the Finance Ministry said it grew by 6.2 percent last year.

“Sri Lanka’s economy demonstrated its resilience once again in 2005 by growing at a rate of 6 per cent, exceeding the expectations in the immediate aftermath of the tsunami
disaster of 2004,” the Central Bank said .

“Inflation was subdued mainly through prudent monetary policy measures supported by favourable developments in aggregate supply.”

Inflation declined from a peak 15.9 per cent in February 2005, to reach 8 per cent by December 2005.

Central Bank says maintaining macro-economic stability is essentially to developing a conducive environment for markets to operate effectively, and economy to remain stable.

For this better fiscal policy was needed. In 2005, Sri Lanka’s budget deficit was 8.7 percent of GDP.

“Further improvements are needed in the fiscal policy to contain the primary and current account deficits thereby generating sur