Sri Lanka avoids economic crash landing, says CB Governor

Sri Lanka has avoided a crash landing of its economy making it a soft landing with great efforts overcoming difficulties by applying macro-economic measures, Central Bank Governor. Nandalal Weerasinghe told a post budget on Tuesday.

He emphasised the need of implementing the 2023 budget proposals and fiscal and monetary reform measures to increase crucial foreign exchange inflows achieve stability in the economy averting the reoccurrence of the crisis

The Government should commit itself to implement long delayed reforms of loss-making state-owned enterprises.

The Central Bank is now compelled to tackle a liquidity shortage in banks, preventing the fall in short term market rates, he told the packed gathering of officials, business leaders, and several economic experts.

The banking regulator has tightened the monetary policy to control rising inflation which was skyrocketed to around 70 per cent in 2022 after two years of money printing and a sudden floating of the rupee with a capitulation requirement and the economy has begun to stabilise.

Treasury Secretary K. M. Mahinda Siriwardana told the gathering the country is facing a challenge to stabilise the economy and the private sector has a vital role to play in assisting the government to avert the economic crisis.

He said the Government’s budget proposal of setting up a Presidential Committee to monitor and ensure timely implementation of budget proposals will bring positive results. 

The Government has to rationalise public spending implementing prudent measures with relevant tax reforms to achieve spending-based consolidation.

“Increasing the revenue and also the reduction of expenditure has to go hand in hand,” he pointed out. (Bandula)