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* Election of India's new PM good for Sri Lanka's economy - Central Bank Governor
Fri, May 30, 2014, 08:15 pm SL Time, ColomboPage News Desk, Sri Lanka.

May 30, London: Election of Narendra Modi as India's new Prime Minister will be good for Sri Lanka's economy, the Governor of Central Bank Ajith Nivard Cabraal has said.

In an interview with The Wall Street Journal during a visit to London Mr. Cabraal has said that a strong, business-friendly government in New Delhi is definitely something to look forward to and election of Modi will make his job "a little easier."

Mr. Cabraal told the Wall Street Journal that he expects to see early signs of that positive impact on Sri Lankan exports later this year, while a boost to trade should definitely be visible in 2015.

The Central Bank Governor is in London to deliver the Key Note Address at an investor forum on Friday (30 May) in London hosted jointly by Sri Lanka's Securities and Exchange Commission (SEC) and the Colombo Stock Exchange (CSE) for international investors.

Speaking of Sri Lanka's monetary policy, which has been left unchanged since a rate cut in January this year, the Governor has said that with the outlook for the global and South Asian economy improving, it's unlikely the Central Bank will need to make further changes to policy in the near term.

"It's very unlikely that we would need to provide additional stimulus," he said adding that there is "a little bit of space" for long-term lending rates to contract further.

According to the Governor, the Bank expects to see the full impact of easing monetary policy to be transmitted to the real economy in terms of lower borrowing costs over the next six months.

He said the Central Bank continues to expect economic growth of 7.8% this year.

Mr. Cabraal said he was also encouraged by signs of a pickup in growth in the euro zone and the U.K. as Europe is also a major market for Sri Lanka's exports and an "improvement in the European economy as well as the U.K. would be very helpful."

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