CB insists on staying on reform path regardless of election outcome

Dr. Nandalal Weerasinghe
PIC BY PRADEEP PATHIRANA

• Says despite who comes to power, hard and painful reforms will have to be pushed through under current IMF programme
• “What we expect is a continuation of reform process regardless of elections or not”- Governor Weerasinghe
• Says supply of fuel and other utilities need to hold elections isn’t an issue as sufficient dollars available within banking system 

Central Bank Governor Dr. Nandalal Weerasinghe said regardless of the future elections, he wants to see a continuation of the economic reform path the country has embarked on, as it is the only way to come out of the current crisis.

Distancing himself from directly commenting on the upcoming elections, which are clearly outside the Central Bank’s mandate, he said whoever comes into power, hard and painful reforms would have to be pushed through under the current International Monetary Fund (IMF) programme. 

“As far as we can see, under whatever the government, they should be able to pursue these hard and painful reforms in the economy,” he pointed out. 

“We have made significant progress so far in terms of putting the required reforms in place. What we expect is a continuation of the reform process, regardless of elections or not,” he told the post-monetary policy review press conference held last week.

While the local government election, which is scheduled for March 9 cannot change the central government, its outcome can significantly affect the composition of the current Parliament and could even lead to fresh national polls, as the majority of the people remain unhappy with the current government, due to its mishandling of the economy.   

The National Election Commission has also written to the Central Bank Governor seeking his assistance in creating the economic conditions conducive to hold an election by facilitating seamless supply of dollars to import fuel for transport and uninterrupted power.

In response, Dr. Weerasinghe said the Central Bank significantly limited its intervention in issuing dollars for essential imports, since around December it saw some improvement in the foreign exchange situation in the local banking system. 

Hence, he said the utilities such as Ceylon Petroleum Corporation and importers of LP gas can now directly purchase dollars from the banking system. 

However, if there is any need, the Central Bank stands ready to intervene and provide dollars.
“But there isn’t a significant shortage of dollars at the moment in the banking system,” he noted.
Sri Lanka saw sizable gains in remittances and tourism incomes in December, which helped to further improve the foreign currency liquidity in the domestic market.