Oct 12, Tokyo: While noting the successful completion of the Stand-by Arrangement (SBA), the longest engagement Sri Lanka has had with the International Monetary Fund (IMF) in July 2012, Sri Lanka said it will look forward to continue engagements with the global lender.

Speaking at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group in Tokyo, Senior Minister of International Monetary Cooperation Dr. Sarath Amunugama said the US$ 2.5 billion SBA facility helped Sri Lanka strengthen its macroeconomic stability, enhance investor confidence and implement important structural changes that are required for sustained economic growth.

The SBA, awarded on July 24, 2009, is the single largest facility Sri Lanka has ever obtained from a multilateral institution.

Highlighting the developments in Sri Lanka, Minister Amunugama despite a difficult global and domestic environment, the Sri Lankan economy grew by 7.1 per cent in the first half of 2012 following two consecutive years of robust growth of over 8 per cent.

He said the weakening global economy, particularly of the United States and the Europe, the two major business partners of Sri Lanka, has adversely affected the demand for Sri Lanka's exports and moderated the country's economic growth in 2012.

The Minister noted that the domestic policy actions implemented jointly by the government and the Central Bank during the first quarter of 2012 to restrict high credit growth and a widened trade deficit had also created imbalances in certain sectors of the economy and impacted the growth momentum.

Considering the developments so far in the global and domestic environment and the outlook for the rest of the year, the Minister projected the economy to grow at around 7 per cent in 2012.

Dr. Amunugama noted that Sri Lanka was able to maintain inflation at single digit levels for over 3 years from February 2009 although inflation gradually edged up in recent months.

He also underscored the government's strong commitment to fiscal consolidation and plans to further reduce the overall budget deficit to 6.2 per cent of GDP this year from 6.9 per cent of GDP in 2011.

The external sector of the economy has been improving, benefiting from policy measures adopted by the Central Bank and the government, he asserted.

The government earlier had discussions with the IMF on receiving fresh financial assistance, reportedly a US$ 500 million Security Arrangement after the conclusion of the SBA.

IMF's resident representative in Colombo Koshy Mathai has said that an IMF mission was in Sri Lanka just recently for routine discussions and a separate mission would arrive in the country to have discussions on an ongoing program.