On September 10, the Central Bank of Sri Lanka (CBSL) Governor, W.D. Lakshman, clarified reports in the media regarding certain statements made by him during a press conference held on September 8. The media reports had created confusion and raised concerns over the country’s foreign exchange reserves and economic stability. In this article, we will take a closer look at these conflicting reports and examine the Governor’s clarifications in detail, shedding light on the current state of Sri Lanka’s economy.
The Central Bank of Sri Lanka has issued a clarification about media reports claiming that the Governor of the Central Bank anticipates a difficult economic period ahead. The Bank states that these reports are a gross misinterpretation of views expressed by the Governor and taken out of the context of the discussion on the challenges that the economy could face in the period ahead if the envisaged reforms are delayed or derailed.
Governor Nandalal Weerasinghe viewed that the difficult and painful policy measures taken by the government and the Central Bank so far have helped stabilize the economic conditions when compared to the unprecedented socio-economic tensions witnessed in 2022. Governor Weerasinghe acknowledged that these reforms have resulted in significant adjustment costs, causing hardship to the people and businesses in the near term, but believes they are necessary to restore stability that will ultimately accrue benefits to people and businesses in the period ahead.
The Central Bank of Sri Lanka’s clarification comes after several local news publications published reports stating that the Governor anticipated a difficult period ahead in the economy. The Bank considers these reports to be misleading and is urging people to exercise caution in interpreting and sharing such news. The Central Bank has been implementing several measures to cushion the economy from the impact of the COVID-19 pandemic, including reducing policy interest rates to support economic activity and providing guidance to banks on credit management practices.
The Central Bank has also been working with the government to implement a number of structural reforms aimed at supporting sustainable economic growth. These reforms include initiatives to improve the business environment and reduce the cost of doing business, promote exports and diversify the economy, enhance public finance management, and reform key regulatory frameworks to enable financial sector development. The Central Bank says it remains committed to these reforms and to proportionate policy adjustments to support the economy and preserve macroeconomic stability.
