COLOMBO: Sri Lanka raised policy rates to ‘lean against’ any fiscal slippage from a delayed value added tax hike and higher than expected credit expansion with growth also expected to be strong, Central Bank Governor Indrajit Coomaraswamy said.
Sri Lanka would still grow at 5.0 percent or more after policy rates were hiked 50 basis points to 8.5 percent, he said.
A suspension of value added tax by courts could undermine revenue collections and undermine a 2.0 percent of gross domestic growth correction this year.
Early indications on growth, was also strong, based on tourist earnings, remittance, domestic industry and services were strong, allowing the rate hike Coomaraswamy said.
