Sri Lanka`s economic growth rate of 5.4 percent last year was below the 6.0-8.0 percent required to create jobs and end rampant poverty, the Central Bank
of Sri Lanka said Friday. Soaring oil prices and a drought have dampened prospects of higher growth, the bank said in its annual report for 2004 while noting that a truce with Tamil Tiger rebels was still positive. `The growth (of 5.4 percent) was largely supported by strong growth in exports, consumption and investments as well as the continuation of the ceasefire
,` the Bank said. `However, the growth rate was much below the 6.0-8.0 percent growth rate required for a sustainable reduction in unemployment and poverty in Sri Lanka.` The bank had initially forecast 2004 growth at between 5.5 and 6.0 percent. It has downgraded its estimate for 2005 from 6.0 percent to 5.3 percent because of the destruction caused by the devastating December 26 tsunami. The central bank noted that growth slipped throughout 2004 and warned that prospects for this year could be affected by both a slowdown in the import of investment goods and the impact of the tsunami. Sri Lanka`s economy grew 6.0 percent in 2003. Despite the weaker growth, per capita income did exceed the 1,000 dollar mark for the first time in 2004, coming in at 1,031 dollars after 948 dollars in 2003, the central bank said . The bank said the impact of the tsunami disaster would largely depend on how fast the affected sectors bounced back. Nearly 31,000 people were killed and a million left homeless. Sri Lanka`s overall balance of payments showed a 205 million dollar deficit last year compared with a surplus of 502 million dollars in 2003. Inflation has picked up sharply to around 18 percent while interest rates at less than 10 percent makeit cheap to borrow, private analysts noted. The year-on-year inflation rate was 17.3 percent in February, after 18 percent in January and an actual fall in prices of 0.2 percent a year earlier, Central Bank figures showed. The International Monetary Fund has warned Sri Lanka to firm up international aid pledges or risk more trouble for an economy already reeling from high oil import prices. Sri Lanka received aid pledges of nearly two billion dollars after the tsunamis but so far only about 16 million dollars has been paid directly into state coffers, the Central Bank said. "
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