IMF expects Sri Lankan growth to rebound next year

"What we're feeling now is that as the global crisis dissipates, Sri Lanka's growth should rebound, and we're expecting that to happen next year. In fact, it may already be happening with the end of the conflict," the Mission Chief for Sri Lanka of the IMF’s Asia and  Pacific Department, Brian Aitken, said.

"The central bank (of Sri Lanka) has a growth estimate of three per cent, which we agree with, but it could be higher than that. It's really hard to determine at this stage," Aitken said.

The IMF Executive Board last week approved the 20-month stand-by arrangement for Sri Lanka.

The amount was about USD 2.6 billion. The first tranche of about USD 322 million of that loan was made available on Friday following Board approval. Sri Lanka had requested for the loan in March.

Responding to a question Aitken said the IMF is considering establishing a mission in Sri Lanka to monitor the implementation of the new programme. "It's currently under consideration," he said.

Aitken also said that IMF is aware about the concerns raised by human rights organisations about the situation in the country.

"We are aware of the human rights issues and the humanitarian situation. As a Mission Chief, and as any mission chief would, it's my job to talk to a wide range of people and institutions beyond just the government. So I am in regular contact with humanitarian organisations, embassies,” he said.

"But, in Sri Lanka's case, they have been hit by the global crisis, and the IMF's mandate is to address and ward off balance of payments crises," he said.

"Now that's the balance of payments crisis sounds rather dry, but it really would have a devastating impact on the economy and on the people, particularly the most vulnerable as we've seen in other countries. So our job, our mandate is to prevent such a crisis," Aitken argued.

Aitken said the end of the conflict will have a positive impact on Sri Lanka's growth. “We would expect there to be higher foreign direct investment. We would expect there to be an increase in and opening up in a way of areas that were under the conflict in the North,” he said.

“The government, as they being their reconstruction programme there, I think would lay the infrastructure for much higher growth. So, I think the end of the conflict is good news for the Sri Lankan economy,” he observed.

The IMF official said the programme of the Sri Lankan government is quite ambitious in addressing the problems, the root causes that created the vulnerabilities for the economy.