Statement by IMF Deputy Managing Director Naoyuki Shinohara at the Conclusion of his Visit to Sri LankaPress Release No. 13/460
November 20, 2013
Mr. Naoyuki Shinohara, Deputy Managing Director of the International Monetary Fund (IMF), issued the following statement in Colombo at the conclusion of his visit to Sri Lanka:
“I wish to thank the Sri Lankan authorities for their gracious hospitality and productive discussions. In particular, I wish to thank Senior Minister of International Monetary Cooperation Dr. Sarath Amunugama, Central Bank of Sri Lanka (CBSL) Governor Ajith Nivard Cabraal and Secretary to the Treasury Dr. P. B. Jayasundera for their warm welcome and frank exchange of views.
“In my meetings, I commended the authorities for delivering strong growth, low inflation, fiscal consolidation, and a strengthening of the external accounts since the end of the war in 2009, as well as on the ambitious growth and development objectives laid out in the Mahinda Chinthana (Vision for the Future). Sri Lanka has also held up its solid economic performance in the face of recent adverse external conditions.
“Our discussions focused on how to accelerate and sustain growth, ensure macroeconomic and financial stability, and take advantage of regional and global integration. Fiscal consolidation has been steady, and the authorities are committed to further reduce the budget deficit and public debt, which remain relatively high. In this context, I support the authorities’ efforts to boost revenues by broadening the tax base and strengthening tax administration—creating opportunities to further reduce the deficit while raising public investment. Private investment, including foreign direct investment, could be supported through improvements in the business environment and a broad dialogue with stakeholders. Finally, I noted that a strong outward orientation has supported rapid growth in key Asian economies and remains an appropriate strategy for Sri Lanka.
“In terms of macroeconomic management, I highlighted the importance of pursuing a cautious monetary policy, keeping in mind Sri Lanka’s past challenges with inflation, the risks posed by Fed tapering, and the need to assess the impact of monetary easing already undertaken. I expect that Sri Lanka would continue its flexible exchange rate regime—allowing it to serve as a key buffer against external shocks—while reserves are allowed to rise to more comfortable levels.
“In a brief trip like this, it is usually difficult to see much of a country, and I am thus particularly grateful to the authorities for arranging for me to visit Hambantota port as well as the historic city of Kandy. I also had the opportunity to share views with eminent local economists and with leading bankers and businessmen on recent economic developments as well as regional and global trends.
“The IMF will continue to work closely with the authorities to provide high-quality policy advice to enhance stability and growth. Once again, I would like to thank the authorities and the people of Sri Lanka for their warm hospitality, and I look forward to continuing our cooperation.”