Sri Lanka

    Sri Lanka needs to cut government spending to reduce fiscal imbalances, lift real interest rates, and rein in money supply growth to stabilize its economy, the World Bank and Asian Development Bank said last week. The government also needed to make sure public sector workers increased productivity in exchange for a wage rise, and it had to take long-term steps to cut the high current account deficit, the multilateral agencies said at seminar in Colombo. Sri Lanka’s economic growth probably held at a two-year low in the second quarter, constrained by the highest interest rates in Asia and renewed violence in the island’s civil war. (Bloomberg, Reuters)

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