Sri Lanka to grow by 5.5-pct in 2010, but fiscally vulnerable: IMF

L to R: Samantha Ranatunga, Chairman, HVA Foods PLC; Jan Müggenburg, Chief Executive Officer, Müggenburg Group; Graham Stork, Chief Executive Officer, HVA Foods PLC; Sarva Ameresekere, Group Chairman, George Steuart & Co. Ltd.

Apr 22, 2010 (LBO) - Sri Lanka's economy is expected to grow at a faster 5.
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5 percent of gross domestic product in 2010 but the country is facing a danger from excessive deficit spending, an International Monetary Fund (IMF) official said. IMF's forecast is slightly lower than Sri Lanka's central bank forecast of a 6.
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5 percent expansion of the economy for this year.

"For Sri Lanka we're projecting an acceleration in growth from 3.

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5 percent last year to 5.5 percent this year," Abdul Abiad from the IMF's World Economic Studies Division told reporters in Washington.
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"There is currently an IMF program which we can't comment on the details, the key priority in Sri Lanka is basically to obtain a credible and sustainable reduction in the fiscal deficit going forward.

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"That is the main vulnerability there right now."

An IMF deal signed with Sri Lanka in 2009 is currently suspended after overshooting budget December deficit targets. Sri Lanka has shown interests in resuming it after a delayed budget for 2010 is presented to parliament.



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Central Bank governor Nivard Cabraal has said that first quarter indicative targets in the original targets have been met by the government.

Sri Lanka's finance ministry has said i

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