Sri Lanka is faced with prospects of an economic slip as targets were this week revised to accommodate moderate growth.
The external sector developments for Sri Lanka were revised with Central Bank Governor Nivard Cabraal announcing that a slowdown in growth at 7.2% was not drastic when compared with the rest of the world.
He made these observations during a media briefing held at the Central Bank in Colombo on Tuesday.
Targets announced were exports at US$11.7 billion, imports at US$20.9 billion, remittances at US$6.5 billion, tourist arrivals over one million with earnings estimated at US$1.2 billion, tier II capital at US$1 billion, FDIs to grow to US$2 billion, public investment/GDP at 6.6% and debt/GDP ratio at 78% flat. Expenditure by the government on investment goods is targeted at US$5.6 billion while the petroleum imports were expected to moderate at US$5.4 billion.
Imports that had been on the rise upto February had moderated since May with the January – March figures indicating US$5.2 billion and this is expected to be limited to US$20.9 billion for the year, the Governor said.
Commenting on the recent moves in the exchange rate, Mr. Cabraal pointed out that the volatility was mainly due to “unfounded speculation” and noted that the market must not be moved based on “unnecessary viewpoints.”
In the meantime, the government expects to enter into a new relationship with the International Monetary Fund (IMF) with the Stand-by Arrangement period drawing to a close that would not involve disbursements.
He noted the IMF-SBA tranche of US$425 is expected to be completed by end July and discussions were expected to commence in June on their way forward.
The reason for new relationship was based on the current “hostile global environment” to ensure they obtain the required endorsements through a surveillance programme, he explained.
A slight reduction in garment exports has been seen in the first few months, but Mr. Cabraal believes there would continue to be a demand for clothes.
However, he noted “it remains to be seen how Sri Lanka maintains its niche markets.”