In Economic news:
Sri Lanka’s economy grows 6.4% in 2012.
Department o Census and Statistics recorded Sri Lanka’s 2012 GDP growth at 6.4% YoY (8.3%in 2011). In 2012, industrial sector (~30% o GDP) comprising mainly o textilesand garments, construction and manuacturing grew 10.3% YoY in-line with2011. Whereas services sector (~59% o GDP) o trade, tourism, transport, nancialservices etc. grew only 4.6% YoY(8.6% in 2011) mainly due to lower import trade.Agriculture sector grew 5.1% YoY (1.5% in 2011) but its contribution to GDPcontinued to decline and now is only 11.1% o GDP. Worryingly this sector’scontribution in 4Q12 dropped to 8.8%, an all-time low. Despite severalgovernment incentive schemes such as ertiliser subsidies (Rs.60bn in 2012 orpaddy), guaranteed prices or selected crops, low interest loans etc., agriculturalsector struggles to make a higher contribution to the economy. The governmentcontinues to oer substantial support as the sector employs about 31% o thecountry’s workorce.
Monthly Bulletin: March 2013
Lack o new unding and slowergrowth to aect Sri Lanka.
Investors Service, an international rating agency viewthe lack o a program with the International MonetaryFund (IMF) and slower growth to aect externalnances. Moody’ states
“Although the government will likely continue to make gradual progress in reducing itsdefcit, the debt burden will remain high,” “The absence o a new unding program is credit negative rom the perspectives o external payments and growth”.
In Feb 13, Sri Lankadecided against seeking unds rom the IMF, as it was not willing to give moneydirectly or government spending stating “the country is not deemed to require anyexceptional nancial support rom the IMF”.Moody’s acknowledging progress since the end o the civil war in 2009, however notedthat a ollow-up unding program would have increased external reserves, bolsteredinvestor condence and supported balance o payments. Additionally, Moody’sregarded Sri Lanka’s External Vulnerability Indicator (oreign reserves/short term debt)to be high at 124% in 2013 (down rom 132% in 2012). Moody’s rates Sri Lanka a “B1”speculative rating with a ‘Positive” outlook.
Sri Lanka to shun global lending agencies.
CentralBank o Sri Lanka (CBSL), Governor, Mr. Ajith Cabraal stated that Sri Lankawould not seek unds rom World Bank, IMF and Asian Development Bank as the country is categorised as a middle income nation. This classicationmeans Sri Lanka does not receive loans at concessionary interest rates. Mr.Cabraal opines that unding would transpire through bilateral agreementswith
CBSL, Department o Census and Statistics