Jan 11, Colombo: Sri Lanka’s Central Bank predicting a 8 percent growth rate of the economy for this year despite the global slowdown, has decided to maintain the current policy interest rates following its monthly Monetary Board meeting held Tuesday.
In the Monetary Policy Review released today the Central Bank said its Repurchase rate would remain at 7.00 percent while the Reverse Repurchase rate remains at 8.50 percent.
“Significant structural changes that have taken place in the Sri Lankan economy over the last several years are expected to provide the momentum for the economy to grow by about 8 per cent in 2012, even in the midst of the slowdown in global economic activity,” the Bank noted in its monthly review.
The Central Bank estimated the GDP growth in 2011 to be around 8.3 per cent with all three sectors, Agriculture, Industry and Services, contributing towards the positive growth performance. The country’s GDP grew at 8.4 percent in the third quarter of 2011.
The Bank expects the inflation to remain around mid-single digit levels in 2012 and improvements in infrastructure are expected to eliminate supply bottlenecks and reduce price pressures.
Sri Lanka projects the earnings from tourism to increase to US$ 1.2 billion in 2012 and remittances from migrant workers to increase to US$ 6.5 billion. Another US$ 2.0 billion is to be earned from foreign direct investment in the year.
The government estimates the fiscal deficit in 2011 to be contained to a level within the revised target of 7 percent of the GDP. The government plans to bring down the fiscal deficit to 6.2 percent of the GDP in 2012.
Considering the positive developments in the economy, the Monetary Board has decided not to change the policy interest rates.