Sri Lanka can overcome economic crisis provided Central Bank is allowed to run independently: Governor

Exuding confidence in overcoming the unprecedented economic crisis, the newly appointed Governor of the Central Bank of Sri Lanka, Nandalal Weerasinghe said that one of the ways to overcome the current crisis situation is to allow the Central Bank to function independently.

Colombo(Sri Lanka): Exuding confidence in overcoming the unprecedented economic crisis, the newly appointed Governor of the Central Bank of Sri Lanka, Nandalal Weerasinghe said that one of the ways to overcome the current crisis situation is to allow the Central Bank to function independently. He further said that President Gotabaya Rajapaksa had given him the authority to run the bank independently and also asked him to expedite measures to get the country out of the crisis.

Speaking at his first media briefing after assuming his duties on Friday evening, the new governor expressed confidence that he will be able to resolve the economic crisis of the country, the Colombo Page reported. Weerasinghe said that his intention is to maintain the Central Bank as an independent institution that could make any decision without any political interferences.

He further said that President Gotabaya Rajapaksa had given him the authority to run the bank independently and also asked him to expedite measures to get the country out of the crisis. The new governor gave information about the changes in the policy interest rates and said that the Central bank has decided to increase the policy interest rate by 7 per cent. He further said that it is the first time in Sri Lanka that the interest rate had been raised at such a high rate.

"We want to give a firm signal. We are serious about what we are doing and wanted independence in what we are doing. And as a result, we took the necessary and sufficient actions today immediately to address the situation. With this situation I would expect some stability in the market confidence and the positive reaction from the market from Monday when markets open," Weerasinghe was quoted as saying by Colombo Page.

Weerasinghe said he met with the bankers and gave them a clear message that he will be transparent in dealing with them. "We will be open, transparent and truthful, and also we need their full support," he said. "Things are challenging and we need to take decisive action. Things will get worse before they get better, but we need to apply the brakes to this vehicle before it crashes," Weerasinghe added.

Meanwhile, Weerasinghe said he will be holding a virtual meeting with the IMF on April 11 and a Letter of Intent to the IMF is to be presented later, it will follow the technical process. The meeting comes about a fortnight after the global lender released the Staff Report of the Article IV consultations held between IMF and Sri Lankan officials.

The IMF had made the recommendations in its staff report made for the global lender's Executive Board following the conclusion of its Article IV consultations with Sri Lanka. The IMF noted that the country faces mounting challenges, including public debt that has risen to unsustainable levels, low foreign currency reserves, and persistently large financing needs in the coming years.

The report recommended implementing a credible and coherent strategy to restore macroeconomic stability and debt sustainability while protecting vulnerable groups and reducing poverty through strengthened, well-targeted social safety nets.

(ANI)