Sri Lanka’s economy will expand at the fastest pace in three years in 2006 as the island rebuilds after the December tsunami, the central bank said this week.
The $20 billion economy may grow 6 percent next year after expanding an estimated 5.3 percent in 2005, the Central Bank of Sri Lanka said in an annual review released Monday.
The economy grew 5.4 percent last year and 6 percent in 2003.
Sri Lanka’s pace of inflation will slow to below 8 percent in 2006 from an estimated 10 percent this year, Finance Minister Amunugama says.
Agriculture will grow 1.9 percent, industry will expand 6 percent and services will grow 7.1 percent next year, the Colombo-based central bank said.
‘The effective implementation of tsunami-related reconstruction could further boost aggregate demand and output,’ the central bank said.
Aid worth $2.2 billion and a debt moratorium worth $300 million together with another $500 million to boost foreign reserves were pledged to Sri Lanka following the tsunami which killed over thirty thousand people.
Even before the aid influx this year, Sri Lanka has experienced more than three years of economic expansion since the February 2002 cease-fire between the government and Tamil Tigers.
An increase in government spending promised in the lead-up to next week’s presidential election and rebuilding work after the tsunami may see economic growth accelerate next year, Bloomberg reported.
‘Reconstruction activity will be a key driver of economic growth,’ Channa Amaratunga, chief investment officer at Boston Asset Management Ltd. in Colombo, told Bloomberg. ‘There will be an indirect rub on the rest of the economy.’
‘Since the next drought cycle is not expected to emerge until 2008, both agriculture and hydropower production are expected to expand further,’ the central bank says.
Both leading contenders in next week’s Presidential election, Prime Minister Mahinda Rajapakse and opposition leader Ranil Wickremesinghe, have both promised to boost government spending if elected.
Sri Lanka will build a harbor in the southern town of Hambantota and resurrect a project to construct an expressway linking the capital Colombo with the country’s international airport, Finance Minister Sarath Amunugama said in Parliament Tuesday.
Projects to rebuild roads destroyed by the tsunami will also commence in the last quarter of 2005 as planned.
‘Our public investment including those in conflict- affected districts and tsunami-affected areas will be funded through a large quantum of concessionary loans as well as grants for the next three to five years,’ Amunugama.
‘This means that our nation can afford to embark on large-scale development programs and add new earning capacity to our economy.’
The $20 billion economy may grow 6 percent next year after expanding an estimated 5.3 percent in 2005, the Central Bank of Sri Lanka said in an annual review released Monday.
The economy grew 5.4 percent last year and 6 percent in 2003.
Sri Lanka’s pace of inflation will slow to below 8 percent in 2006 from an estimated 10 percent this year, Finance Minister Amunugama says.
Agriculture will grow 1.9 percent, industry will expand 6 percent and services will grow 7.1 percent next year, the Colombo-based central bank said.
‘The effective implementation of tsunami-related reconstruction could further boost aggregate demand and output,’ the central bank said.
Aid worth $2.2 billion and a debt moratorium worth $300 million together with another $500 million to boost foreign reserves were pledged to Sri Lanka following the tsunami which killed over thirty thousand people.
Even before the aid influx this year, Sri Lanka has experienced more than three years of economic expansion since the February 2002 cease-fire between the government and Tamil Tigers.
An increase in government spending promised in the lead-up to next week’s presidential election and rebuilding work after the tsunami may see economic growth accelerate next year, Bloomberg reported.
‘Reconstruction activity will be a key driver of economic growth,’ Channa Amaratunga, chief investment officer at Boston Asset Management Ltd. in Colombo, told Bloomberg. ‘There will be an indirect rub on the rest of the economy.’
‘Since the next drought cycle is not expected to emerge until 2008, both agriculture and hydropower production are expected to expand further,’ the central bank says.
Both leading contenders in next week’s Presidential election, Prime Minister Mahinda Rajapakse and opposition leader Ranil Wickremesinghe, have both promised to boost government spending if elected.
Sri Lanka will build a harbor in the southern town of Hambantota and resurrect a project to construct an expressway linking the capital Colombo with the country’s international airport, Finance Minister Sarath Amunugama said in Parliament Tuesday.
Projects to rebuild roads destroyed by the tsunami will also commence in the last quarter of 2005 as planned.
‘Our public investment including those in conflict- affected districts and tsunami-affected areas will be funded through a large quantum of concessionary loans as well as grants for the next three to five years,’ Amunugama.
‘This means that our nation can afford to embark on large-scale development programs and add new earning capacity to our economy.’
