Sri Lanka will have an economic growth rate of around 4.5% by the end of the year said Central Bank Governor Dr. Indrajit Coomaraswamy.
Speaking at the monetary policy review meeting yesterday, he said that one of the main reasons for this was the drought and several other weather-related issues, which resulted in the import of large quantities of rice and sugar.
In addition, the geo-economic policies in the Gulf and other countries also resulted in the reduction of foreign remittances.
He said that these may result in the increase of inflation, but it would settle down towards the end of the year and even fall lower early next year.
The Governor said that with the signing of the Hambantota Port deal, Sri Lankan foreign direct investments would receive a major boost, as there would be over US$ 400 million from it.
He also said that Sri Lanka’s Central Bank has purchased US$ 800 million from forex markets boosting forex reserves to US$ 6.7 billion by end July 2017.
Dr Coomaraswamy said that the pressure on the rupee too would settle down soon.
He said today Sri Lanka’s economic fundamentals are getting into place and even the Board of Investment has being restructured and the new board would be more focused.
Asked by the Daily News to comment on the request by the Chinese Ambassador, Yi Xianliang in Colombo for the direct use of Chinese currency RMB rather than the US dollar in its bilateral trade with Sri Lanka, he said the Central Bank has no objection. “However Chinese businessmen prefer to deal with US dollars.
The Governor said that China’s international business is growing and in five to six years’ time, Chinese currency would be very strong.
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