Sri Lanka Finance Minister wants big rate cut, IMF show of support

(Reuters) – Sri Lanka’s Finance Minister on Thursday called for the country’s central bank to make a big cut in interest rates and for the IMF to give a show of support as he questioned their recent growth forecasts for the country.

"They were wrong," Ravi Karunanayake told Reuters in an interview, referring to the IMF’s recent growth forecast of 5-5.5 percent for this year. "I think it will be in the range of 6.5-6.7 percent."

With the IMF expected to decide on a post-programme monitoring in mid-November, he said: "We would like them to see what we have done and show that they are with us."

He also called for the country’s central bank to make a big cut in interest rates to as low as 4-5 percent.
He added that although the rupee could fall as the dollar strengthened, he expected it to stabilise and find its own equilibrium once outflows are stemmed.

He expected currency reserves to rise to about $10 billion (roughly six months of import cover), from just under $7 billion reported in July.

Speaking ahead of the country’s Budget in about two weeks’ time, he said the government intended to reduce corporate taxes, which vary widely but can be as high as 35-40 percent, by "a meaningful proportion".  (LONDON, Oct 29/2015)

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