Sri Lanka’s inflation turnaround, a lesson for all economists: SEACEN chief

Sri Lanka bringing down its inflation from a record-high to a single-digit within a span of just 10 months is a success story the island nation can flaunt once it pulls itself fully out of the crisis, said the chief of the South East Asian Central Banks (SEACEN) Research and Training Centre.Dr. Mangal Goswami, Executive Director of the SEACEN said that the island nation has been successful in tackling inflationand ensuring it does not overburden the economy over a period of time.

“This is really for us economists is a huge lesson how Sri Lanka has been able to bring down inflation to single-digits now,” said Dr.Goswami.
He shared his insights during a public lecture held at the Centre of Banking Studies in Colombo yesterday evening. Sri Lanka’s inflation peaked in September 2022 to almost 70 percent. Since then, it has been steadily declining, primarily due to the significant influence of higher base effects. As of August 2023, the inflation rate stood at 4 percent.

In an effort to maintain inflation at low levels, Dr. Goswamy asserted that Sri Lanka must strive to reduce its reliance on monetary financing of the budget.He went on to stress that Sri Lanka, in its journey towards revival and growth, needs to step up efforts in putting the sovereign on a more stable footing and implementing the sustainable debt trajectory pathway plan.

While continuing to re-anchor inflation expectations, the country should prioritise the comprehensive debt restructuring plan and ensure it is delivered right, and on time,
he remarked.