Jan 02, Colombo: Sri Lanka's economy is estimated to grow by 6.0 percent in 2009 while the annual inflation should fall to 9.0 percent, the governor of the Central Bank, Ajith Nivard Cabraal said today.

Presenting the Road Map for Monetary and Financial Sector Policies for 2009 and beyond, the governor said the monetary programme for the year is based on a growth of 5.0-6.0 percent and an annual inflation of around 9 percent.

However the recently introduced stimulus package is expected to uplift economic growth to around 6 percent. The Bank would continue to monitor the developments carefully, and revise the monetary policy stance as and when needed, the governor said in his report.

Noting that the budget deficit has gradually declined, from 8.4 percent of the GDP in 2005 to the current figure of 7.0 percent of GDP for 2008, Cabraal said in accordance with the Budget 2009, the overall budget deficit is expected to decline to around 6.5 percent of GDP.

“This decline is based on an expected increase of 21 percent in government revenue, while expenditure and net lending is expected to increase by 17 percent,” it said.

The governor said the Central Bank will continue its policy of targeting reserve money instead of adjusting policy rates to control inflation.