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Tsunami hits
Lanka's economic growth, fuels inflation - IMF |
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The
losses suffered by Sri Lanka from the tsunami that battered
its coastal areas last month are likely to be worse than
expected, with economic growth, the balance of payments and
inflation all likely to suffer, an IMF report released
Wednesday said.
Preliminary indications, the report said, were that the
December 26 tsunami which pounded fishing villages and
tourist resorts in Sri Lanka would have "an adverse impact
on 2005 GDP growth of one percentage point."
The IMF cut its Gross Domestic Product (GDP) growth
projection for Sri Lanka from five percent to four percent
and it forecast a rise in inflation of 14 percent in 2005,
up from a previous estimate of 12 percent. The report,
prepared mainly by the IMF's Asia and Pacific department and
posted on its website Wednesday, warned that the "broader
macro-economic impact will clearly be substantial.
"The fishing industry has been devastated, agricultural
production may be affected and tourism will suffer,
especially in the short term," it said, adding that a full
needs assessment would likely only be ready by the end of
January.
The
Sri Lankan government had initially put the cost of
rebuilding its battered coastline
at about 1.3 billion dollars but has recently revised this
to 3.5 billion dollars, which it hopes will be funded by
international donors.
"The impact on balance of payments prospects will also be
significant," the IMF report said, forecasting the 2005
trade deficit at 2.69 billion dollars, up from a pre-tsunami
projection of 2.28 billion dollars.
Although major export sectors - textiles and garments - have
not been affected, tourism earnings were expected to fall
some 15 percent compared to 2004.
"While some of the financing needs will be met by increased
aid flows, preliminary estimates by staff indicate that Sri
Lanka will be hard pressed to keep international (forex)
reserves at the pre-tsunami level (about 2.3 months of
imports)," the report said. |
           
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