As Sri Lanka emerges from its worst economic crisis in 2022, the environment is ripe for the private sector to build resilience by establishing policy buffers, according to a Central Bank of Sri Lanka (CBSL) official.
Dr. Chandranath Amarasekara, Assistant Governor of CBSL, highlighted the need for continued macroeconomic reforms to avoid future crises, urging the private sector to proactively enhance its resilience.
Dr. Amarasekara emphasized that while stability has largely been restored, growth must now be driven by structural reforms focused on productivity, competitiveness, efficiency, and governance. “Corporates should create financial buffers and strengthen their resilience to global uncertainties,” he said, noting that financial discipline and robust balance sheets are crucial moving forward.
The CBSL has already made strides by reducing interest rates significantly, with treasury bill rates dropping from 33 percent to around 5 percent, and the prime lending rate falling from over 30 percent to 8.4 percent.
Echoing similar sentiments, Talal Rafi, Economist and Director at Ernst & Young Sri Lanka, clarified the role of the International Monetary Fund (IMF), emphasizing that the IMF’s function is not to drive growth but to stabilize economies in distress. He further explained that economic growth is primarily driven by government policy, development banks, and private sector innovation, rather than by the IMF or CBSL.
Rafi stressed the importance of a strategic shift toward domestic sector growth, investment in digitalization, and collaboration with academia to foster innovation-driven industries. He also highlighted the necessity of progressive taxation, stating that relying on temporary revenue measures, like vehicle taxes, would be unsustainable as Sri Lanka strives to increase its export revenue to US$ 19 billion by 2025.
