SL to record 'modest' 4 % economic growth in 2019| #AsiaNewsNetwork

SL to record 'modest' 4 % economic growth in 2019| #AsiaNewsNetwork
Published 23 February 2019

The Island

By Hiran H.Senewiratne



The available leading indicators and current projections suggest that Sri Lanka's  2019 real economic growth would be more than four percent, which is expected to be modest, Central Bank Governor Dr Indrajit Coomaraswamy said.



"The economy is expected to gradually reach its potential in the medium term, benefiting from the low inflation environment, competitive exchange rate and appropriate policies to support investment, Coomaraswamy told the media while commenting on the monthly monetary policy review. The event was held at Central Bank auditorium yesterday.



He said  the inflation outlook remains favourable in the medium term and domestic supply side developments are expected to be favourable in the period ahead. "Projections indicate that inflation is likely to remain in the desired 4-6 percent range in 2019 and beyond, he said.



‘External sector however, has witnessed some improvements so far in 2019 amidst challenging global economic conditions, the Governor said.



‘ Trade deficit was contained significantly in November and December 2018 due to the policy measures adopted by the government and the Central Bank to curtail motor vehicle and non-essential goods imports, he said.



Coomaraswamy added - 'The noticeable growth of earnings from tourism continued to support the current account of the balance of payments (BOP), although workers' remittances recorded a marginal decline in 2018.



'Foreign investments to the government securities market have recorded a net inflow thus far during 2019 while the rupee strengthened somewhat underpinned by net inflows to the government securities market and the slowdown in imports, along with changing global financial conditions.



'Meanwhile, Sri Lanka met the scheduled repayment of the maturing International Sovereign Bond of US dollars 1 billion in January 2019.



'By the end January 2019, gross official reserves stood at US dollars 6.2 billion, which is sufficient to finance 3.4 months of imports.



'The Central Bank's Monetary Board has decided to maintain policy rates and reduce the Statutory Reserve Ratio (SRR), the commercial banks' deposit requirement to boost economic growth.



'The Monetary Board has decided to reduce the Statutory Reserve Ratio (SRR) applicable on all rupee deposit liabilities of commercial banks by 1 to 5 percent with effect from March 1, 2019.



'The Board also decided to keep the policy interest rates of the Central Bank unchanged at their current levels, and accordingly, the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank will remain at 8.00 percent and 9.00 percent, respectively.



'Accordingly, the Monetary Board has concluded that the continuation of the current neutral monetary policy stance is appropriate.'

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