IMF revises Sri Lanka's 2013 growth forecast to 6.5%

The International Monetary Fund (IMF) has revised Sri Lanka's 2013 growth forecast to 6.5% following a panel visit to the island for Post-Programme Monitoring talks. Todd Schneider who led the staff mission to Colombo from September 17 to 25, said, "GDP growth accelerated to 6.8% in the second quarter of 2013. However, given moderate credit growth, flat budget revenues, and relatively low growth in non-oil imports, it is not yet clear whether the acceleration in economic growth will continue into the second half of the year. "The mission now forecasts growth of 6.5% in 2013. The current account deficit narrowed in the first half of 2013, and the balance of payments surplus should widen this year. Non-performing loans have risen somewhat, but the financial system remains relatively strong." Given the possible tapering of exceptional monetary stimulus by the U.S. Federal Reserve in the months ahead, emerging and frontier markets are likely to face a period of slowdown or even reversal of capital inflows. While the rupee has been relatively resilient so far, the balance of external risks for Sri Lanka has shifted to the downside, he added. This staff visit, part of enhanced surveillance is routine practice for countries which have had "exceptional access" to IMF resources, as is the case for Sri Lanka, which last year successfully completed a US$2.6 Billion IMF program, the IMF said.