COLOMBO: Sri Lanka’s ailing economy grew at a slower-than-expected 4.8 per cent last year despite lower oil prices as a slowdown in European markets hit exports, the central bank said on Tuesday.

Prime Minister Ranil Wickremesinghe said his government had inherited a ‘very bad situation’ when it came to power early last year but that things were improving.

“We are turning the economy around,” he said. “We do not have a balance of payment crisis any more. We may have had it before, but not now.”

The news of a slowdown in growth from 4.9 per cent in 2014 came as Sri Lanka negotiates with the International Monetary Fund for a bailout to help fund substantial debt repayments.

The bank said a slowing down of net foreign exchange inflows, including worker remittances, and capital outflows had generated a balance of payments deficit. It came despite the welcome effect of a sharp drop in oil prices — Sri Lanka is dependent on imported crude.