In a special session held on Tuesday, Dr. Nandalal Weerasinghe, Governor of the Central Bank of Sri Lanka (CBSL), provided a comprehensive briefing to Members of Parliament on the measures taken to stabilise the country’s economy. This session, chaired by Speaker Mahinda Yapa Abeywardena, was conducted in accordance with Section 80 (2) (a) of the CBSL Act No. 16 of 2023, which mandates periodic updates to Parliament.
Dr. Weerasinghe, alongside the Central Bank’s Governing Board and Monetary Policy Board, highlighted the significant progress made in stabilising Sri Lanka’s economy despite ongoing global and domestic challenges. Key points discussed included:
- Inflation Control: The Governor reported a dramatic reduction in inflation from a historic high of 70% in September 2022 to 5% currently, thanks to aggressive monetary policy measures.
- Monetary Policy Adjustments: Since June 2023, the CBSL has adopted an accommodative monetary policy stance, reducing policy interest rates by 7.25 percentage points. This approach has been supported by low inflationary pressures and stable external sector conditions.
- Currency Stabilisation: Enhanced foreign exchange inflows and reserves have contributed to a stabilised rupee and decreased market interest rates. Credit to the private sector has also shown gradual expansion since February 2024.
- Financial System Stability: Dr. Weerasinghe detailed the CBSL’s initiatives to bolster financial stability, including the completion of an Asset Quality Review for nine large banks and the development of a restructuring and recapitalisation roadmap. The establishment of several oversight committees and the publication of the Macro-prudential Policy Framework were also noted as significant steps.
- IMF Program: The Central Bank’s pivotal role in the successful implementation of the current IMF program was emphasised.
The session also saw Members of Parliament raising concerns about the financial situation and seeking further clarification on CBSL’s strategies. They emphasised the need for transparency, accountability, and regular updates on the financial health of the economy.
Additionally, Parliament acknowledged Dr. Weerasinghe for receiving an honorary recognition in Global Finance’s Central Banker Report 2024.
For ongoing updates and detailed information on Sri Lanka’s economic and financial landscape, stay tuned to our coverage.