COLOMBO, Feb 18 (Reuters) – The International Monetary Fund
on Friday said Sri Lanka is likely to have achieved its budget
deficit target of 8 percent of gross domestic product (GDP)
under a $2.6 billion loan programme.
After completing its sixth assessment of Sri Lanka’s
performance under the loan, the mission head said the
government was executing its policies in line with the goals of
“Performance against the end-December targets was
satisfactory, with the 2010 budget deficit likely to have been
held within the target of 8 percent of the GDP,” Brian Aitken,
the IMF mission head, told reporters in Colombo.
The global lender on Feb. 3 approved Sri Lanka’s sixth
tranche of the loan and waived end-December fiscal deficit and
international reserves targets at Sri Lanka’s request, but
urged more financial reform and commitment to executing changes
that improve its weak fiscal position. [ID:nSGE71201O]
The IMF originally set a 7 percent fiscal deficit target in
2009 and 6 percent last year, excluding post-war reconstruction
However, later the global lender revised the target to 8
percent in 2010 after the island nation overshot the 2009
target and hit an eight-year high deficit of 9.8 percent.
The IMF last year delayed the second tranche of the loan by
nine months until Sri Lanka’s government presented a
financially prudent budget.
Analysts and economists have said Sri Lanka could miss this
year’s revised deficit target of 6.75 percent due to the recent
floods, which the government had estimated as causing damage of
“Any effect on food prices is likely to be temporary and
given the strength of the Sri Lankan economy, the overall
impact on output growth should be limited,” Aitken said.
“Addressing the impact of the flood may require some
reallocation of budget resources, but the authorities feel that
it is premature at this stage to revisit their targeted deficit
for 2011 of 6.75 percent of GDP.”
The global lender also has set 5.25 percent deficit target
It also said that economic growth in country’s $50 billion
economy was 7.75 percent in 2010. The central bank had
estimated growth at 8 percent last year.
(Writing by Shihar Aneez; Editing by Bryson Hull)
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Sri Lanka likely to have achieved deficit goal-IMF