Economy on track says CB

The Sri Lankan economy is on track to realize its macroeconomic targets despite the worsening global economic conditions, the Sri Lankan Central Bank said on Tuesday.

A statement by the bank said that the adverse global conditions are not likely to affect the Sri Lankan economy more than that was anticipated at the time of revising the economic growth forecast for 2012 downward to 7.2 percent.

It also said that the amount of credit that could still be disbursed in the second half of the year by licensed banks even with a credit ceiling in place could comfortably support the revised economic growth path.

The bank said that with the recent receipt of an IMF loan of 414 million U.S. dollars, the proceeds of a successful fifth International Sovereign Bond issue of 1 billion U.S. dollars in July 2012, and other foreign inflows, Sri Lanka’s gross official reserves are estimated to have risen to around 7.1 billion U.S. dollars by the end of July.

However the bank noted that inflation in Sri Lanka has picked up with year-on-year inflation increasing to 9.8 percent in July from 9.3 percent the previous month.

“This increase has been mainly due to adverse weather conditions and the resulting disruptions to domestic food supplies. However, although there could be some transitory inflationary pressures in the near term, the expected improvements in domestic supply conditions as well as the measures that have been very recently implemented are expected to contain consumer price inflation at single digit levels during the remainder of the year, ” the bank said.

The bank said that the current monetary policy stance will remain unchanged while the repurchase rate and the reverse repurchase rate will also remain unchanged at 7.75 percent and 9. 75 percent respectively. (Xinhua)