Former CBSL Chief Stressed Need for Fiscal Buffers Amid Global Uncertainty

COLOMBO (News 1st); Repeated bouts of macroeconomic stress have been a key factor in Sri Lanka's lack of progress compared to other Asian countries, said Deshamanya Dr. Indrajit Coomaraswamy, former Governor of the Central Bank of Sri Lanka.

He attributed these issues to the fiscal operations of the government, which have been characterized by a combination of populist policies and an entrenched entitlement culture.

"Each time we entered an IMF program, we saw stabilization, but as elections approached, we reverted to square one," he noted. Dr. Coomaraswamy emphasized the need for fiscal and external buffers to handle shocks in an increasingly uncertain global economy.

He also stressed the importance of building up reserves and maintaining the gains achieved through recent reforms, such as the Public Finance Management Act and the Central Bank Act. "We need to ensure that we secure these gains and achieve accelerated growth," he concluded.

Deshamanya Dr. Indrajit Coomaraswamy, former Governor of the Central Bank of Sri Lanka, praised the Central Bank's recent efforts in stabilizing the economy, describing it as one of the most impressive achievements in his fifty-year career.

"I have not come across such an impressive stabilization in my professional career. Bringing inflation down from 70% to about 3% is remarkable. This achievement is largely due to the reduction in electricity prices rather than demand-side pressures," Dr. Coomaraswamy stated.

He commended the Central Bank Governor and his team for their swift and decisive actions, despite initial criticism. "The aggressive measures taken were clearly the right thing to do," he added.