Central Bank Governor Dr. Nandalal Weerasinghe

• Insists on going beyond a stable economic path to sustainable growth 
• Warns any deviation would have disastrous consequences on economy
• Calls for strong commitment to staying the course than being complacent
• Cites debt restructuring is the next big challenge 
• Says new IMF pillar to address governance and corruption will boost investor confidence 
• Notes social safety net is critical for successful implementation of IMF program 
• Extends gratitude to ADB for being a lifeline during financial crisis 
• Suggests countries in distress to take proactive measures without waiting for last minute 

By Charumini de Silva

Central Bank Governor Dr. Nandalal Weerasinghe on Tuesday expressed confidence that Sri Lanka can outperform the set targets by the International Monetary Fund (IMF) for the $ 2.9 billion Extended Fund Facility (EFF), subject to the strong commitment to staying the course without being complacent.

Speaking at the launch of the Asian Development Bank’s (ADB) annual flagship economic publication - the Asian Development Outlook (ADO) released on Tuesday, he expressed confidence that Sri Lanka can outperform the targets.

“In my view, we can outperform and we have the capacity to reach a 3% primary fiscal surplus. Many thought Sri Lanka will’s economy will crash, but with the tight fiscal and monetary policy we were able to prevent hyperinflation and higher economic contraction. Thus, I believe we can go on a steady medium to a long-term growth path,” he added.

Dr. Weerasinghe however said in the event Sri Lanka deviates from the IMF program as it had in the past, it will have disastrous economic consequences.

“Sri Lanka does not have another chance, where we took one step forward and two steps back again. We must have a strong commitment in the next four years of the EFF and deliver on the same path to recovery and beyond. If we don’t deliver, the creditors will not be excluded and the country will have no access to credit for the long term. We all need to understand that it should be our share of contribution not for the IMF,” he stressed.

The Central Bank Governor pointed to the debt restructuring process as the next big challenge that Sri Lanka needs to embark on by having a prudent monetary policy, fiscal balance, inflation targeting regime, proper exchange rate policy and an independent Central Bank.

He also said the new pillar of the IMF program is that it addresses the governance and corruption aspects. “These measures will certainly enhance the investor confidence,” he added.

The social safety net was also highlighted as one of the key areas that the Government is continuously working on to identify those individuals who lost their employment, and income and had fallen below the poverty line.

“Without protecting and supporting the poor and the vulnerable groups, this program will be unsustainable,” he pointed out.

Dr. Weerasinghe also extended his deepest gratitude to the ADB for being a lifeline during the worst financial crisis, adding that the social and fiscal assistance that was provided during the economic crisis was of immense support.

Going forward he said, Sri Lanka looks to medium to long-term support from ADB, World Bank, and other bilateral institutions and partners to bring in the next phase of debt sustainability, fiscal stability and liquidity.

The Central Bank Governor also said the lessons other countries will learn from the economic crisis are to take proactive measures and seek assistance without waiting till the last minute. 

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