The Central Bank (CB) is to give a detailed explanation on Tuesday on Sri Lanka's economic development so far this year and progress of the2012 CB Roadmap, officials said.
CB Governor Ajith Nivard Cabraal said the media will be provided with details about developments in the foreign exchange market, recent bond issues (by the Bank of Ceylon) and other issues and progress on targets set in the Roadmap for this year.
The rupee meanwhile settled down on Friday to Rs. 128 per US dollar, two rupees below the level (Rs. 130) in the previous week.
Dealers said this was due to a multitude of reasons including less import demand, a warning by the Central Bank of action against banks involved in speculative trading and comments by Treasury Secretary P.B. Jayasundera who also attributed the falling rupee to unrealistic speculation.
Asked whether the Bank will seek any more financial assistance from the IMF once the current programme ends, Mr. Cabraal said this was not needed but the two sides were discussing a surveillance programme with constant reviews of the economy by the IMF.
“This kind of review will be good for the markets and provide some stability,” he said.
The IMF is due to send a review mission on June 4 ahead of finalizing the final US$400 million tranche under the $2.6 billion Standby-Arrangement (SBA loan) which ends in July.
Meanwhile Fitch Ratings, in a report released on Friday, has been complimentary of Sri Lanka’s economic performance and fundamentals, much in contrast to a report the agency issued in February when it raised concerns over balance of payments.
On Friday, Fitch said the country’s ‘outlook is stable’ and noted that the “ratings reflect Fitch's view that the authorities have taken the appropriate action to correct recent pressure on the balance of payments and place it on a more sustainable trajectory."
It said given the weakened state of Sri Lanka's external finances and a heavy external debt refinancing schedule through to 2013, the authorities' ability to persist with policies that address existing
macroeconomic imbalances and improving external liquidity is crucial.
It said the level of Sri Lanka’s foreign exchange reserves meets with international conventions and does not indicate an immediate risk of substantial balance of payments stress.
It said the resumption of IMF tranche disbursements following the implementation of policy measures aimed at macroeconomic rebalancing is a positive development. “More importantly, measures implemented by the Central Bank and the Government since February 2012 have tightened monetary conditions and could help Sri Lanka to return to a more sustainable GDP growth trajectory over the long-term,” the report said.
Earlier in a February 28, 2012 report, Fitch said the strong correlation between Sri Lanka’s GDP and import volume growth in the last five years has made it difficult to maintain the current high economic growth without the build-up of macroeconomic imbalances and raises questions over Balance of Payments (BoP) stability.
That report noted that “Fitch believes there are three potential sources of additional pressure on the BoP in the near-term. A surge in global oil prices, a worsening in global economic and financial conditions and capital flight could all exert negative pressure on the ratings.” |
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