Lankapage Logo Recent Top Stories
CP 14 YEARS
Go Home Home Serving the Sri Lankan community globally since 2000
go to LankaPage.com

Leading News from Sri Lanka::

* Sri Lanka expects to be an Upper Middle Income country by 2016
Fri, Jan 3, 2014, 01:19 pm SL Time, ColomboPage News Desk, Sri Lanka.

Jan 03, Colombo: Sri Lanka expects to graduate to the "Upper Middle Income" category by 2016 and the Central Bank will fashion its macroeconomic policies accordingly to avoid the Middle Income Trap, the head of the country's monetary authority said on Thursday.

Central Bank Governor Ajith Nivard Cabraal explained that as some countries have stagnated at this middle income level, Sri Lanka's medium term macroeconomic strategy will need to focus on avoiding this "Trap".

Presenting the Central Bank's policy direction and work plan for the upcoming year "Road Map for Monetary and Financial Sector Policies for 2014 and Beyond" for the eighth consecutive year, Cabraal said Sri Lanka for the new year targets a 7.8 percent growth in the country's GDP while maintaining inflation at mid-single digit levels.

"Now we are a US$67 billion economy. We expect the economy to grow 7.8 percent this year and to gradually expand it to 8.5 percent in 2016," he said.

However, the predicted growth could slow down due to external factors such as uncertain weather conditions, geopolitical tensions and slower growth in global demand.

Central Bank is confident that inflation could be contained at around 5% or below, in the medium term and it is expected to be 4-6% during 2014.

The Road Map 2014 presentation comprised an assessment of the macroeconomic developments in the previous year, policy direction for 2014 and for the medium term, particularly to ensure a smooth transition into the post-US$ 4,000 per capita Upper Middle Income era.

Reducing trade deficit from current 12.8 percent of GDP in 2013 to 11.6 percent of GDP in 2014 and continuous improvement in productivity are some other goals set for 2014.

The monetary authority expects the budget deficit to narrow substantially in 2014 to 5.2% of GDP from 5.8% in 2013. By 2016, the fiscal deficit is expected to be reduced to below 4% of GDP.

Noting that Sri Lanka aims to achieve a US$ 100 billion economy, the head of the monetary authority said it would demand a significant improvement in the productivity levels of the current workforce.

In the fiscal sector, the major reforms implemented in the recent past are expected to enhance revenue mobilization and in the medium term, revenue is expected to reach 15 to 16% of GDP with the expected improvements in the tax base and tax administration, and greater tax compliance.

The maintenance of foreign reserves at desirable levels will enable the Central Bank to prudently manage market dynamics and any impending risks, Central Bank head said.

The current account is expected to record a surplus in 2014, after 26 years, reflecting the rebound in revenue and the rationalization of recurrent expenditure. It is expected to improve faster than anticipated in the past due to increased inflows from workers' remittances, tourism and the service exports will mitigate the impact of trade deficit.

Cabraal expressed hope that state-owned enterprises will become more viable in the year.

"We hope performance of SriLankan Airlines, Ceylon Petroleum Corporation and Ceylon Electricity Board is going to change and this would create enormous impact on the well-being of the country," he said.

The Governor said the Central Bank is in a position to steer the economy along a more stable and sustainable path while maintaining economic and price stability and financial system stability to support sustainable and inclusive growth this year.

ColomboPage - Recent 10 Stories
Sri Lanka Attorney General's Department sets up provincial units
-- [2 hours ago]
Sri Lanka briefs diplomatic community on measures taken to subdue renewed threat of terrorism
-- [4 hours ago]
Sri Lankan President vows to take strict action against lawbreakers, not to permit religious discord
-- [5 hours ago]
Parliamentary delegation of Balochistan visits Sri Lanka
-- [6 hours ago]
Sri Lanka business chamber conducts workshop on media Strategies for corporate sector
-- [6 hours ago]
Sri Lanka to conduct tsunami drill today
-- [7 hours ago]
Japan offers higher education scholarships to Sri Lankan students
-- [7 hours ago]
Australia says co-operation with Sri Lanka to prevent people smuggling is a success
-- [8 hours ago]
Sri Lanka appoints Malinga as captain of T20 Team until March 2015
Extremist Sri Lankan Buddhist organization surrounds government ministry

Copyright © 2000, 2014 by LankaPage.com (LLC) :
The news and other contents on ColomboPage are copyrighted property of LankaPage.com, LLC. Any unauthorized use of any information on ColomboPage may constitute a violation of copyright laws. You need written permission to reproduce, republish, post, transmit, broadcast or distribute, material from this site from LankaPage.com, LLC. However, news organizations or broadcasters in Sri Lanka may republish the news items in ColomboPage with proper acknowledgment to ColomboPage.