The government together with the Central Bank of Sri Lanka (CBSL) will introduce and implement essential structural changes that are required to drive the economy along the envisaged growth path.
The implementation of these structural reforms, along with the picking up of Government revenues and rationalisation of government expenditures, should ensure sustainability and easy management of public debt in the period ahead
Given the economic recovery Sri Lanka has before it in 2021, the Central Bank has pledged to continue its accommodative monetary policy stance, despite an estimated 3.9% growth contraction last year.
Delivering the ‘Road Map 2021: Monetary and Financial Sector Policies for 2021 and Beyond’, Central Bank Governor Prof. W.D. Lakshman reiterated the challenges faced by the economy last year, especially after the second wave hit, projecting that Sri Lanka experienced an annual contraction of around 3.9% in 2020.
"It will establish a single digit interest rate and push private sector credit to expand but monetary and fiscal interventions are essential to provide adequate impetus to the economy amidst the challenging domestic and global macroeconomic conditions," he claimed.
The Central Bank has ensured liquidity in the market with a number of accommodative monetary measures, leading to the country recording growth of 1.5% in the third quarter of 2020.
The second quarter had seen a sharp contraction, a period which coincided with a protracted lockdown from mid-March due to the Covid-19 pandemic.
The IMF and the World Bank had forecasted the Sri Lanka economy to contract by 4% in 2020.