(LANKAPUVATH | COLOMBO) – The Governor of the Central Bank of Sri Lanka (CBSL ), Dr. Nandalal Weerasinghe says the economy of the country, which was in a very dangerous situation, is now in a somewhat stable state due to the financial policies introduced by the Central Bank.
Addressing a media briefing Tuesday in Colombo, the Governor of the Central Bank said several reasons mainly contributed to the depreciation of rupee and rise in inflation in the country.
Sri Lanka was able to avoid a crash landing of its economy and turn it into a soft landing but on a lower point, he added.
The Governor also said that the 2023 budget includes the basic structural reforms needed to prevent the country from returning to this kind of economic crisis.
“After January our reserves were in a state of diminishing and not receiving anymore further. Even when we were no longer able to pay the debt, the Central Bank maintained the value of the rupee at 203 (per dollar). The remaining reserves are spent on debt and fuel. And when that was not possible, in March, the rupee was left to float without any control. That’s when the rupee suddenly went from 203 to 365, 380.”
He pointed out that Inflation increases due to continued minting of money. “Then the next thing we had to do was to tighten the monetary policy. Accordingly, we increased the policy interest rate in April and implemented a process to reduce monetary expansion. At the same time, various steps were taken to reduce money laundering and increase income.”
“If we have not taken those macroeconomic measures the situation would have been much worse”, he noted.
Commenting on the 2023 Budget presented to the parliament yesterday, the CBSL Governor emphasized that this stability could carry forward with necessary reforms.
Central Bank Governor said in order to achieve long-term stability of the economy, no matter how many difficulties arise, the economic reforms presented in the budget should be implemented.
