Sri Lanka needs international donor support for next two years to meet post-tsunami costs, IMF

Sri Lanka will be forced to depend on international support for the next two years, as a US$ 1.8 bn post-tsunami reconstruction bill puts a strain on balance of payments and the budget, the IMF said late Friday.
Sri Lanka will be forced to depend on international support for the next two years, as a US$ 1.8 bn post-tsunami reconstruction bill puts a strain on balance of payments and the budget, the IMF said late Friday. The country’s economy is expected to remain flat at 5¼ percent in 2005, but much of the growth will be offset by reconstruction efforts, the International Monetary Fund noted while approving a US$ 157.
5 mn in emergency loan for Sri Lanka.

The world’s financial police, also deferred US$ 110 mn as interest payments due in 2005 by one year.

The IMF expects Sri Lanka’s budget gap to widen to 9.6 percent of GDP in 2005 from a pre-tsunami deficit target of 7.
5 percent. The forecast deficit is wider than last year’s 8.
2 percent.

The Fund says Sri Lanka may miss its budget deficit target because of “higher current and capital outlays and a marginal adverse impact on revenues.
”

“The rehabilitation expenditure will put a great strain on the balance of payment and the budget. The emerg