Sri Lanka’s economy impressive despite challenges - IMF Executive
Sri Lanka’s economy performed impressively in the recent past despite
the challenging external and domestic circumstances, said Executive
Director IMF, for Sri Lanka, India, Bangladesh and Bhutan Adarsh Kishore.
He was delivering a lecture on “State of the Global Economy and Emerging
Financial Architecture” at the Central Bank Training Centre in
Rajagiriya on Wednesday.
He said that due to the adverse global conditions, the growth rate of
Sri Lanka for the first quarter of 2009 had dropped to a moderate 1.5
percent. Given its high degree of openness, Sri Lanka’s economy suffered
heavily from the contraction of external trade but things are changing
for the better.
Kishore said that Sri Lanka approached the IMF for a Stand by
Arrangement for USD 2.6 billion which is equivalent to 400 percent of
Sri Lanka’s quota.
He was optimistic about positive results in agriculture,
communication and the banking sectors.
Referring to the present state of the global economy, he said that
the key factors which affected recession were easy credit in US, risky
asset creation and lack of supervision.
The global economy is pulling out from the deepest recession since
post World War 2 and recovery is expected to be sluggish. Although
financial conditions are easing, it remains far from normal.
Therefore, monetary and fiscal policies should remain supportive
until a sustained recovery takes hold. GDP is bottoming out across the
globe although the rate of unemployment continues to rise.
The outlook for Public Finances remains a concern and sustained price
stability, safe financial system governed by market principles,
sustainable public finances and a balanced and sustained global growth
are the exit strategies for the situation. He proposed concerted policy
actions to restore financial sector health, continued macro economic
policy support to bolster demand, a gradual improvement in credit
conditions and cushioning the effect from sharply lower oil and major
The new global financial architecture addresses issues of macro -
economic and financial stability, some specialized institutions and
revamping the IMF.
These specialized institutions include an expanded Financial
Stability Board and a BIS Banking Supervision Committee. However, the
new global financial architecture needs a lot more and it needs complete
revision, Kishore said.