CBSL governor warns against any deviation from intended fiscal policy trajectory

The Governor of the Central Bank of Sri Lanka, Dr. Nandalal Weerasinghe, says any political or social uncertainties or reversals of hard earned achievements that exerts significant pressure on the economic reforms agenda could lead to a deviation from the intended policy trajectory.

He said this could potentially result in adverse and irreversible impacts on the economy and the recurrence of the economic and social crisis that Sri Lanka experience in the past two years.  

He expressed these views while attending the 37th Annual Conference of the Organisation of Professional Associations of Sri Lanka held on Monday (26) at the Shangri-La Hotel in 5Colombo, under the theme of “Towards Sri Lanka’s Sustained Economic Growth”.

“As you all know the ongoing reform agenda comprises measures that are expected to augment the resilience and stability of the economy, which is what is needed for the medium-long-term growth”, he said.

The Central Bank Governor said maintaining macro-economic stability is a prerequisite to ensure sustained growth trajectory in the medium to long term. 

He further said, although these reforms are painful in the short term, it is crucial for all stakeholders to remain committed and ensure the swift implementation of this long-overdue reforms to set the economy on the path towards sustain, inclusive and sustainable growth. 

“Despite all such efforts any political or social uncertainties or reversals of hard earned achievements that exerts significant pressure on the reforms agenda could lead to a deviation from the intended policy trajectory, potentially resulting in adverse and irreversible impacts on the economy and recurrence of the economic and social crisis that we experience in the past two years”.

At the same time, policies of macroeconomic stability itself could not be sufficient to propel the economy to a high-growth path that would take Sri Lanka to an advanced country status within a short time, Dr. Weerasinghe said.

He stated that with the current sovereign debt crisis, the government does not have any physical space to drive the economic growth through higher spending or lower taxes as in the past since reinstating fiscal and debt sustainability is the need of the hour at present and also for the future.