Sri Lanka targets 8.0-pct growth 2-4-pct inflation : CB Governor

COLOMBO (EconomyNext) – Sri Lanka is targeting economic growth of 8.0 percent in 2015 and inflation around 2-4 percent, Central Bank Governor Nivard Cabraal said.

In the next few years the Central Bank would pursue a ‘flexible inflation targeting framework’ where the ‘tolerable’ inflation could rise to 4-6 percent, he said presenting a monetary policy road map for 2015.

The Central Bank will also act to contain inflation expectation where a budget deficit of 5.0 percent of GDP by the Treasury will help, he said.

Next year broad money growth of 13.5 percent is in line with an 8.0 percent GDP growth, Cabraal said.

In 2014 Sri Lanka ended the year with 2.1 percent inflation, helped by low credit growth.

Cabraal said single digit inflation has been maintained for 71 months.

In 2012 however Sri Lanka’s rupee depreciated sharply sending inflation up, which was measured by a privately compiled index at 20 percent.

In 2014 the rupee had depreciated only 0.25 percent against the US dollar and had appreciated against the Euro and Japanese Yen which had depreciated amid loose monetary policy.