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Dr. Indrajit Coomaraswamy

Lankan political instability affects economic consolidation: CB Governor

Sri Lanka’s economic consolidation faces the risk of losing its current momentum if political instability prevails further following the local government election defeat of the ruling coalition government, Central Bank Governor Dr. Indrajit Coomarswamy warned.

He told a media conference convened to brief monetary policy review in Colombo on Thursday that accelerated economic growth cannot be expected if the political instability continues in the country.
The country’s economic growth is expected to reach 5 to 5.5 per cent of GDP from last year’s growth of around 4 per cent.

Answering question raised by a journalist, he noted that economic reforms and other monetary policy measures of the Central Bank will have to be implemented in accordance with the CB road map released recently.

He didn’t rule out the possibility of easing austerity economic policy matters in the form of government handouts to win the masses in impending provincial council elections or a general election.

The country will have to continue economic reforms including the process of divesting state owned hotels, he said adding that the government faces an uphill task of massive debt repayment this year.

The CB has to face many obstacles in implementing monetary policy in cooperation with the government, as the political economy exerts considerable pressure on monetary policy.

The government’s continuous dependence on expansionary financing to give handouts to win the masses was a recurring problem faced by the CB. (Bandula)

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