Sri Lankan economy registers record growth

Colombo, April 6 (IANS) The Sri Lankan economy recorded its highest post-independence growth of 8.3 percent last year beating the previous record of 8 percent in 2010, the Central Bank said Friday.

In a statement following its monetary policy review meeting Thursday evening, the bank said the record growth in 2011 was boosted by increased contributions from the industry and services sectors.

Sri Lanka achieved independence from British rule in 1948 but the island nation suffered 30 years of war with Tamil Tigers till the rebels were finally defeated in 2009, reported Xinhua.

Since then Sri Lanka's economy has seen a drastic improvement with the country focusing most of its resources on development.

The Central Bank said that while year-on-year non-food inflation increased in March 2012 due to the full impact of the adjustment of domestic energy prices and bus fares, year-on-year food inflation remained negative for the third consecutive month.

Overall, the year-on-year change in the Colombo Consumers' Price Index increased to 5.5 percent in March 2012 from 2.7 percent in February.

The bank noted that the domestic foreign exchange market has shown clear signs of stabilization following the expected volatility during the early stages of allowing greater flexibility in the Rupee exchange rate as against the US dollar.

"The increased foreign exchange inflows contributed to this stabilization, while prudential measures implemented by the Central Bank supported this development," the statement said.

However, the statement noted that recent policy measures introduced by the Central Bank are expected to decelerate the expansion in broad money supply in the near term.

As a result, the Central Bank feels it is essential that the current shortfall in government revenue is effectively addressed and public expenditure is further rationalized, so as to significantly lower the reliance on bank sources to finance the Government budget deficit.