By Shihar Aneez
COLOMBO (Reuters) - The International Monetary Fund said on Thursday it was holding its forecast for Sri Lanka's 2019 economic growth at 3.5% in spite of devastating Easter bombings, saying it was too early to assess financial damage.
The April 21 bombings, which killed more than 250 people in churches and hotels and were claimed by Islamic State, have scared tourists away and soured business sentiment on the island.
Sri Lanka's economy, which depends on tourism, garment manufacturing, tea exports and remittances, was already at a low point before the bombings.
The economy grew 3.2% last year, the weakest in 17 years, as a weeks-long political crisis and monetary policy tightening sapped business confidence and cooled investment.
A Reuters poll of 10 analysts predicted last week that growth could slide to just 2.5% this year following the attacks.
But the IMF said it was maintaining its growth projection due a lack of new official data and clear information to assess the impact on growth of the Easter bombings.
"It will be speculative for us to revise our growth projection at this juncture," Manuela Goretti, the IMF's mission chief for Sri Lanka, said in a teleconference with journalists in the capital Colombo.
"So we maintain our growth projection for 2019 at 3.5% with the gradual improvement in the medium term at 5%."
Still, the fund said Sri Lanka's budget and current account deficits could widen more than expected because of the bombings.
Previously, the IMF said it expected that this year's fiscal deficit would fall to 4.5% of gross domestic product (GDP) from last year's 5.3%, and the current account deficit to 2.8% from 3.2% in 2018.
The lender did not provide fresh estimates, but said normalcy had largely returned to the island, thanks to government measures including the implementation of an emergency law.
"Authorities expect to get through this incident expeditiously, putting the country back on track to benefit from improving economic fundamentals," the IMF said in a report earlier on Thursday.
In March, the Fund agreed to extend a $1.5 billion (£1.2 billion) loan facility to Sri Lanka for an extra year, following the country's seven-week political crisis last year.
On Tuesday, the lender approved disbursal of a $164 million tranche, bringing the total disbursed to more than $1.16 billion.
The loan is crucial for Sri Lanka to secure more attractive borrowing terms.
(Reporting by Shihar Aneez; Writing by Alexandra Ulmer; Editing by Richard Borsuk and Frances Kerry)