Sri Lanka will “immediately receive” about $217 million from the International Monetary Fund (IMF) following the completion of the Fund's review of the country's economy.

“We are pretty happy with what we are seeing in the Sri Lankan economy. The external [sector] position is certainly much healthier than it used to be a few years ago, reserves are up substantially,” said the IMF Resident Representative in Sri Lanka, Dr Koshy Mathai. There were some predictable risks: Imports are rising, so are oil prices. But with a predicted surplus in balance of payments (largely because of FDI and other capital inflows), these were not cause for too much worry

On February 2, the IMF completed the fifth review of Sri Lanka's economic performance under a programme supported by a Stand-By Arrangement. The completion of the review enables the immediate disbursement of the sixth tranche of loan bringing total disbursements under the arrangement to $1.516 billion. Dr Mathai said that there were no signs that the economy was over-heating; or to suggest that the demand was growing too fast.

Asked about the recent inflation and galloping food prices, he said that this appeared to be a supply-side problem.

7 per cent growth

The IMF expects the economy to have grown by 7.5 per cent in 2010 and by 7 per cent in 2011 (8 to 9 per cent according to the Central Bank of Sri Lanka). “Statistically speaking, we are all at the same ballpark… But our estimates are a little bit more conservative than that of the Central Bank,” he said.

Dr Mathai was of the opinion that Sri Lanka had to re-orient its exports to India and China – India now accounts for 4 per cent of Sri Lanka's exports and China, one per cent. Currently, Europe and the US account for 60 per cent of all exports from Sri Lanka. “Reorientation to regional integration can help Sri Lanka… and boost its export share,” he said.

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