“Economy to get back on track from next year onwards”

CBSL Governor Dr. Nandalal Weerasinghe noted that the economy would be back on track for recovery from next year onwards.

Dr. Weerasinghe speaking on May 23 at the Sri Lanka Press Institute he pointed that the exchange rate too was stabilizing and beginning to appreciate and this was an early sign of confidence.

He noted that successful IMF discussions and debt restructuring would also act as a future boost to the economy.

“We have been able to finance the supply chains. We have been able to pay some of the ships waiting outside the harbour and soon essential items would be released to the market. This would be a key turning point to the future success of the economy.”

Dr. Weerasinghe characterized his administration of the Central Bank as being tougher on the flow of currency to and from the economy. “We will utilize whatever foreign exchange earnings coming into the country to provide essential imports. We also want to introduce more measures some time later in the year and if these proved to be a success the economy will be back on track next year,” he added.

Monetary policy is going to prioritize the financing of essential goods and services while delaying the financing of items that are not essential. The government has already been successful in curbing part of the large black market foreign currency operations of the recent past and has further imposed crackdowns on profit-seeking activity. Dr. Weerasinghe defended compulsory rules for repatriation and conversion of export proceeds. He said, “Given the situation, we are compelled to do this. In my opinion, these aren’t the best measures but we have to do them.”

He suggested that the problem was actively exacerbated in the recent past through inaction by the Central Bank. He noted that through the insistence by the Monetary Authority of an exchange rate well below the market-clearing rate there grew a large black market for foreign exchange. Dr. Weerasinghe noted that the large black market for foreign exchange became dominant and started to facilitate the importation of non-essential items. The Central Bank has since looked to curb unessential imports and usage of black market proceeds for trade through the imposition of requirements for the clearance of goods through customs.

He stressed that it would be good for the confidence of the general public to see the appointment of a finance minister. The Central Bank Governor predicted that more people in Sri Lanka would become unemployed and be below the poverty line in the near future.

“We hope to provide cash grants to the people and other incentives in the future,” he said.