Central Bank Governor Ajith Nivard Cabraal said the economic growth projection for 2009 has been revised taking into account the positive trends the economy is experiencing after the war on terror.

"We have revised our projections and now expect the economy to grow by 3.5 percent to 4.5 percent in 2009," Cabraal said addressing the Sri Lanka Economic Summit yesterday.

Last April the Central Bank announced two sets of economic growth projections for the year.

A pessimistic projection put economic growth anywhere between 2.5 percent and 3.5 percent while an optimistic forecast predicted economic growth to be between 4.5 percent and 5 percent.

Cabraal said the revised forecast was based on the level of optimism in the country’s economy.

The country’s economy grew by 1.5 percent during the first quarter of the year.

Inflation lowest in five years

The Central Bank said yesterday that inflation had dipped to its lowest in five years when the point-to-point change in the Colombo Consumers’ Price Index recorded 0.9 percent for the month of June.

However, the Central Bank expects inflation to pick up during the course of the year but remain at single digit levels.

"The containment of the inflation was mainly due to the lag effect of tight monetary policy stance pursued by the Central Bank and easing of commodity prices in the international market," the Central Bank said in a statement last evening.

"However, it may move gradually upwards during the remainder of the year, while remaining at single digit levels throughout the period," it said.

The annual average rate of inflation continued to slide recording 12.5 percent in June over 14.7 percent in May. The Central Bank expects this to decelerate further and reach a low single digit level by the end of the year.

Regulation of non-bank financial institutions

Cabraal said the Central Bank would work together with other regulatory bodies such as the Securities and Exchange Commission (SEC), Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB) and Insurance Board, in a bid to consolidate efforts to stabilise the financial system of the country.

"We will soon require registered finance companies to list in the Colombo Stock Exchange (CSE)," he said.

A listing means an institution would fall into the regulatory jurisdiction of the SEC, CSE and SLAASMB, added to the regulation by the Central Bank.