Sri Lanka’s economic growth slowed slightly to 4.8 per cent last year due to a fall in exports of its main commodity, tea, official figures showed on Tuesday.
The figure marked only a marginal decline on 2014, but will add to concerns after international lenders and ratings agencies warned the country is heading for a debt crisis.
Tea production dropped 2.6 per cent during 2015 to about $545 million, the Department of Census and Statistics indicated in a statement, while exports fell by nearly 7 per cent to 306 million kilogrammes.
The declines were offset by services, which grew 56.6 per cent, and industrial output, which expanded by 26.2 per cent. Last week, the government announced a series of emergency tax increases to combat a debt crisis that has forced it to seek a bailout from the International Monetary Fund (IMF). Prime Minister Ranil Wickremesinghe has put on hold for one year plans to lower corporate taxes, and has revived a capital gains tax abolished in 1987.
The moves are aimed at repairing the economy, battered by mounting debt repayments that led ratings agency Fitch to downgrade Sri Lanka’s credit rating last month.
In a special statement to parliament, Wickremesinghe blamed the previous government for allowing debt to spiral, saying his ministers had uncovered $7 billion in loans unaccounted for in the national budget. However, the current administration embarked on a spending spree after taking power in January 2015 to deliver on election promises of higher wages and lower prices, increasing the deficit and sparking concern over the balance of payments.
Last month, Sri Lanka received pledges of over $2 billion in loans and equity from the Asian Development Bank over three years. It is in bailout talks with the IMF, although the sum it is seeking has not been disclosed, Jordan Times reports.