Current process should be coordinated and permitted to function smoothly as planned:
There is no need to have a second Domestic Debt Optimisation (DDO) as the current process is very focused and strong, said Governor Central Bank (CB), Dr. Nandalal Weerasinghe at a CFA Society of Sri Lanka organised event at the Shangri-La, Colombo on Friday.
Dr. Weerasinghe in his keynote address said that the local DDO was a very vital need but it was done without having a negative impact on the banking sector and other vital sectors.
“However, if the DDO is not coordinated and permitted to function smoothly as planned a second DDO may have to be introduced which will look at ‘engaging’ with the Banking and some other sectors.”
He also said that one of the key elements that led to the economic crisis was the lack of Government revenue and high debt servicing and this is currently being addressed.
In 2019, Sri Lanka was re-classified as a middle income nation and Dr. Weerasinghe, said that due to this Sri Lanka was not entitled to obtain ‘loans’ on concessional rates and this too resulted in borrowing at a higher interest rate.
The Governor said that today most of the negative economic barrowmeters are quickly turning around. “Inflation which was 70% and heading towards hyperinflation of around 100% has now come down to around 12% and by the end of this month it will be a single digit and remain in that territory.”
In addition high interest rates, along with high exchange rates too now are at manageable levels and we are now moving towards stabilising other macro economic sectors.
“We also see increased revenue coming from tourist arrivals and foreign remittances.”
“The new Banking Act that was passed in Parliament too would give us more teeth towards this.”
CFA Society Sri Lanka President Aruna Perera, said that he saw many natural and man-made disasters such as LTTE