“Sri Lanka continues to reap peace dividends after ending the three-decade long war against terrorism. The economy grew by 8% in 2010 which is the first full financial year after conclusion of the war. There is strong evidence of continuation of the growth momentum in 2011 and beyond as the first half of 2011 also grew by 8%,” said Sri Lanka’s Minister of Enterprise Development and Investment Promotion Sarath Amunugama, as Governor of Sri Lanka for the World Bank Group and the International Monetary Fund at the group’s Annual Meeting in Washington DC on September 23.

“International investor confidence on Sri Lanka has been improving steadily. International rating agencies upgraded Sri Lanka’s sovereign ratings and revised outlook in a positive direction in the second consecutive year”, he added.

He also said, “Despite some turbulence in international capital markets due to concerns on sovereign debt vulnerabilities in advanced countries, the Sri Lankan government was able to raise capital from international capital markets at historically low rates, reflecting renowned investor confidence on Sri Lanka due to improving macroeconomic fundamentals and political stability”.

Referring to the Sri Lankan economy, the minister elaborated on the country’s progress following the end of the 3 decade long conflict. “Improved macroeconomic management has helped stabilize both the interest rate and exchange rate which are conducive for higher investments. The healthy external sector performance was reflected in a less volatile exchange rate, while post conflict productivity gains helped maintain competitiveness”, he added.

He said that the private sector is responding positively to emerging economic opportunities arising from permanent peace and greater integration of the Northern and Eastern provinces with the mainstream economy of the country. “Private sector credit is currently expanding at around 30% reflecting renewed investor confidence compared to negative growth experienced in the recent past. Such a rapid credit
growth is not likely to create excessive demand in the near future as the country now has enhanced capacity to absorb excess demand supported by major infrastructure development programmes commenced under the leadership of His Excellency the President Mahinda Rajapaksa”.
He provided a detailed account of the country’s progress during the past three years, in terms of resettlement of IDPs, demining, rehabilitation of ex-combatants, infrastructure development and political reconciliation.

“We continue to benefit substantially from assistance extended by multilateral and bilateral development partners and renewed confidence placed by international investment community in Sri Lanka. We look forward to strengthening these partnerships further,” he added.

Click here to read full statement

http://www.imf.org/external/am/2011/mmedia/view.aspx?vid=1176653922001