CB Governor urges everyone to support the IMF programme

Everyone in Sri Lanka has to collaborate towards the successful implementation of the economic reform program agreed upon by the International Monetary Fund (IMF) and the government for the 17th time, Central Bank Governor Nandalal Weerasinghe emphasized.  

The government should not take two steps backward from its step forward in the implementation like on previous occasions, he said adding that it has to address the foreign exchange shortages and restructure massive debt not like the past balance of payment issues.       

He reminded the journalists at a media conference on the third monetary policy review of the year held in Colombo on Tuesday that the country has missed the opportunity of restoring macroeconomic stability 16 times previously.

The state authorities have failed to abide by the benchmarks stipulated by the IMF to manage the economic challenges and implement needy reforms under the pressure of interested parties, he claimed.  

Therefore all Sri Lankans including parliamentarians, political parties, civil society activists and trade unions should extend their support this time towards the successful implementation of the IMF supported programme

The country’s headline inflation is expected to reach single digit levels by end 2023 and stabilise at anticipated levels thereafter over the medium term, he predicted.

Inflation is projected to enter disinflation path, thereby further anchoring inflation expectations.

Headline inflation (year-on-year) based on the Colombo Consumer Price Index (CCPI) continued to decelerate for the sixth consecutive month in March 2023.

Despite a sizeable impact from the recent hike in electricity tariffs and envisaged second round effects of previous hikes, headline inflation moderated in March 2023, mainly reflecting a larger-than-expected reduction in food inflation.

Meanwhile, core inflation also decelerated for the sixth consecutive month in March 2023, reflecting the continued moderation in underlying demand pressures in the economy.

A faster deceleration of inflation is expected from April 2023 with the reduction in domestic prices of essential commodities.

The subdued aggregate demand on account of tight monetary and fiscal policies and improved domestic supply conditions will ensure the envisaged disinflation process in the period ahead, supported also by anchoring inflation expectations, the Central Bank announced. (Bandula)