Central Bank predicts reduction in Budget deficit

The Central Bank expressed confidence that regardless of global economic pressure,  Sri Lanka will be able to weather economic storms in 2012, and the proactive policy measures would bear fruit in the second quarter of the year.

The Governor of the Central Bank Ajith Nivard Cabraal acknowledged that 2012 started slow with a higher trade deficit driven by an 86% increase in motor vehicle imports as well as increased gold, oil and investment goods, right policy measures were now in place to keep the economy on track.

Cabral predicted that remittances will hit an all-time high of US$ 6.5 billion, earnings from tourism US$ 1.2 billion and Foreign Direct Investment will nearly double to US$ 2 billion this year.

He said that fifteen projects worth US$ 1 billion have been identified by the government and in addition to this US$ 500 million from the Colombo South Harbour as well as three mixed development projects from a Malaysian investor, Colombo-Kandy Expressway, Sampur Coal Power Plant and petrol refinery in Trincomalee will add to investment prospects this year.

The aforementioned details were given by the Governor the Bank at a media conference in Colombo yesterday.

He said that stock market flows are projected to be US$ 500 million while inflows up to 2 May have been US$ 172 million, which is the same amount as net outflows in 2011.  Mr. Cabral said that foreign reserves in the country  is in an  appreciable  position  at the moment, and  by the month of May  the foreign  reserves  amounted to 5.9 billion US$.

The Governor also pointed out that at a time even the United States, China and India could not achieve their respected targets, Sri Lanka’s achievement of 8.3% economic growth last year is very significant. He also said that the budget deficit which stands at 6.9 percent of the GDP will go down to 6.2 percent.(niz)