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Sri Lanka holds rates for a 3rd month after IMF loan agreement

epa02891485 A Sri Lankan vendor of fancy goods plies his trade on a motorbike along the roads of a suburb in Colombo, 01 September 2011. A box of such items used to be carried on the head in the good old days but with modern trends a motor bicycle has take the burden off the vendor's head.  EPA/M.A.PUSHPA KUMARA

 

Colombo / Bloomberg

Sri Lanka left its benchmark rates unchanged for a third straight month after it agreed a $1.5 billion loan from the International Monetary Fund to help improve public finances.
The Central Bank of Sri Lanka kept the standing lending facility rate at 8 percent and the standing deposit facility rate at 6.5 percent, it said in a statement. The move was predicted by eight of nine economists in a Bloomberg survey while one saw a 50 basis point increase.
Inflation is expected to remain in “mid-single digit levels,” the central bank said. “The Extended Fund Facility expected from the IMF and the other multilateral and bilateral credit facilities, along with the planned structural reforms, would enhance the country’s resilience to external shocks and improve investor confidence in the economy.”
The island economy will grow 5.8 percent in 2016 from 4.8 percent in 2015, and the pace may quicken to 7 percent in the medium term as investor sentiment improves, the central bank said last month. Sri Lanka’s
refinancing concerns had prompted Fitch Ratings in
February to downgrade its credit ratings and S&P Global Ratings cut the nation’s outlook to negative.

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