Inflation could come down faster than earlier forecast.

Central Bank Governor Dr. Nandalal Weerasinghe says inflation is likely to come down faster than earlier forecast, even by the Central Bank, and Sri Lanka could achieve the 4-6 percent preferred inflation band by early part of the fourth quarter of this year.

It became evident last week that there were differences of opinion between the Central Bank and the International Monetary Fund (IMF) over Sri Lanka’s inflation outlook.

The Central Bank grudgingly hiked policy rates by 100 basis points and made sure to announce that it was carried out on IMF’s insistence as Sri Lanka didn’t want any hurdles on its way to secure the US$ 2.9 billion IMF bailout package. 

Inflation, which peaked almost at 70 percent last year, has been steadily coming down and February recorded an inflation reading of 50.6 percent, according to the Colombo Consumer Price Index. 

Meanwhile, Governor Weerasinghe told Reuters that Sri Lanka aims to announce a debt-restructuring strategy in April and expedite talks with commercial creditors ahead of an International Monetary Fund review of a bailout package in six months.

Sri Lanka has secured financing assurances from all its major bilateral creditors, including India and China, and so has set the stage for the IMF to give its final approval for the US$ 2.9 billion, four-year bailout package on March 20, the multilateral lender said on Tuesday.

The bailout is the culmination of months of negotiations as Sri Lanka looks to emerge from its worst economic crisis in more than seven decades.

Source: www.dailymirror.lk

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