ECONOMYNEXT – Sri Lanka should consider an International Monetary Fund program along with debt restructuring to get over current external stress and the central bank should follow its core objectives, former Governor Indrajit Coomaraswamy said.
Sri Lanka has external stresses, which are generally driven by the budget deficit and monetary forbearance, Coomaraswamy told a business forum organized by Sri Lanka’s Ceylon Chamber of Commerce.
He said the central bank’s role as the agent which raised debt for the government should not be subordinated to its core objectives.
Coomaraswamy said the central bank needed more independence to carry out its core objectives.
At the moment, economic and price stability is its core objective.
However critics have said its tendency to engage in aggressive open market operations in recent years has assured currency crises roughly every two years.
Coomaraswamy said Sri Lanka had opportunities to use its location, living conditions to draw foreign investments and grow exports.
However economic reforms were vital to take the country forward, he said.
Sri Lanka’s state enterprises, including energy pricing, were areas to be tackled, he said. (Colombo/Dec06/2021)