The International Monetary Fund (IMF) has approved $426.8 million in financial assistance to Sri Lanka.
With this, the total disbursements under the Stand-By-Arrangement to Sri Lanka have reached about $2.13 billion, the IMF said in a statement.
In addition, the IMF Executive Board has approved an extension of the arrangement period to July 23, 2012 to allow time for the completion of the eighth and final review.
“While the strong economic recovery continued in 2011, and inflation remained subdued, a combination of rapid credit growth and a tightly managed exchange rate caused the external current account deficit to widen and external reserves to fall sharply. As a result of higher oil prices, the state energy enterprises also continued to run significant losses,” said Mr Min Zhu, Deputy Managing Director and Acting Chair of IMF.
Mr Zhu said the Sri Lankan authorities have recently introduced a broad package of measures to rein in the current account deficit, stem the reserve loss and bolster fiscal performance.
Monetary and credit policy have been tightened, petroleum and electricity prices increased, petroleum taxes raised and the rupee trading band abolished to allow the exchange rate to adjust more flexibly, he noted.
“The authorities are taking steps to mitigate the adverse impact on the most vulnerable. Fiscal policy will also continue on a consolidation path, with the 2012 Budget targeting a reduction in the deficit to 6.2 per cent of GDP,” he said.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.