COLOMBO: Sri Lanka’s economic growth held up in 2016 despite the fiscal consolidation and weather-related shocks the International Monetary Fund (IMF) said releasing its country report Thursday. The economic growth was supported by robust activity in the industry and service sectors, and improved confidence following the Extended Fund Facility (EFF) program agreement in June, the global lender said. Despite some delay in passing the VAT amendments, the authorities met the program targets on tax revenues and the primary balance. However, the end-2016 reserve target was missed reflecting the resumption of portfolio outflows late in the year and intervention to limit currency depreciation. Progress has been made in most fiscal-structural reforms, but energy pricing reforms have stalled due to political resistance. Real GDP growth is projected to recover gradually to 4.7 percent in 2017, supported by the continued momentum in construction and service sectors since late 2016.
Sri Lanka’s economic reform program is supported by an Extended arrangement under the Extended Fund Facility (EFF) that was approved in June 2016 for the amount of SDR 1.1 billion (185 percent of quota and about US$ 1.5 billion) over 36 months. So far two purchases equivalent to SDR 239.788 million have been made, and another purchase equivalent to SDR 119.894 million will be made available upon completion of the second review.