Supported by the sustained—although still uneven and fragile—recovery in the global economy, domestic economic conditions continued to improve over the review month. The momentum benefitted from a modest firming in tourism output, gains in foreign investment led construction activity and public sector infrastructure works. Consumer price inflation remained relatively benign, posting a modest uptick over the twelve-months to May. On the fiscal side, the Government’s overall deficit narrowed during the eleven months of FY2010/11, as several significant one-off revenue transactions boosted revenue collections, and helped to offset an increase in expenditure. In monetary developments, both liquidity and external reserves contracted, due mainly to the repatriation of initial public offering (IPO) proceeds by a foreign-owned company.
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