Sri Lanka considers single digit interest rate regime

The Central Bank intends to establish a permanent single digit interest rate structure in the economy and it will be maintaining market interest rates at single-digit levels going forward, Governor of the bank W.D. Lakshman said.

He was speaking at the virtual presentation of the Road Map for 2021 in Colombo on Monday. 

 “The business community will benefit from low-cost borrowing facilities corresponding to a low interest rate regime. This is imperative to promote investment and entrepreneurship in the country, the needed foundation for sustained high economic growth,” he said.

“The availability of low-cost funding on a sustainable basis would encourage businesses, including start-ups, to venture into new industries and sectors that have high growth potential.”

The Central Bank is confident that inflation will remain within the targeted range of 4-6 per cent over the medium-term, he added.

Recent tax reform initiatives constitute a much needed transformation of the country’s tax system towards greater simplicity.

The already announced tax relief measures are expected to stimulate the economy while actively contributing to improve business confidence.

Any revenue shortfall due to the changes in taxes announced recently is expected to be largely offset by action taken to eliminate unproductive current expenditures and to prioritise capital expenditures, he emphasised.

It is expected that the fiscal consolidation path remains intact and the level of public debt stock remains sustainable. (BS)