Sri Lanka GDP Growth 7.2pct in 2010 - Fitch Forecast

08th October 2010, www.dailynews.lk

Fitch Ratings forecasts Sri Lanka's GDP growth to average 7.2 percent during the 2010 - 2012 period compared to an average of 5.1 percent recorded during the last 20 years.

The rating agency recently uplifted the country's creditworthiness which reflect the economic benefits of post war transformation and IMF support, news360.lk reported. Fitch says the IMF program in the country has lifted investor's confidence on Sri Lanka thus helping to pick up private capital inflows to the country and in turn a rise in foreign exchange reserves.

Fitch in its rating report adds that Sri Lanka has made headway in integrating the war torn Northern and Eastern provinces into the rest of the economy which it notes will help boost the nations productive capacity.

The Agency also predicts that the end of the war will help Sri Lanka cut defence spending which accounted for over 15 percent of the Government spending.

It says the Island's authorities' ability to boost tax revenues while consolidating the budget deficit and significantly lowering the level of overall Public debt would be a positive development for the country's credit ratings.

Further adding, Fitch notes that the ability to attract foreign direct investment will help Sri Lanka to offset its loss of EU GSP plus status. www.priu.gov.lk