The Governor of the Central Bank of Sri Lanka (CBSL) Ajith Nivard Cabraal said the Six-Month Roadmap for Ensuring Macroeconomic and Financial System Stability’ presented on Friday, October 1 will bring immediate solutions to some of the current burning issues.
He said the Roadmap is spelt out to bring about immediate solutions to critical issues and a broader ‘one year’ Road Map would follow, leading the country towards more stability.
He said firstly, the CBSL will remove the 100 percent Cash Deposit Margin Requirement on 600 items imposed earlier on import of non-essential goods. The Governor said “We observed that this decision caused problems for many sectors and we have now reversed it. However, we urge importers not to import excess stocks and import what is only necessary.”
He said the Central Bank plans to provide liquidity support of up to Rs. 15,000 million to finance interest accrued in loans that have been given to the moratorium, so that Financial Institutions (FI) could deal with the moratorium effect in a sustainable manner. “There will also be a Cancellation of all penalties imposed by FIs during the moratorium period.”
The CBSL Governor also spelt out a 20 point ‘To Do list’ which includes several short-term measures to ease the burden of public, financial institutions, SME and other sectors. “No changes whatsoever will be made to Personal Foreign Currency Accounts (PFCA), previously known as the NRFC / RFC accounts,” he said.
The Facilitation of Education and Health related forex outflows immediately and lifting the ceiling imposed on Outward Investment and Migration allowances in January 2022 were two other key points in the 20 point ‘To Do list’.
The Governor said that they hope to maintain a 5 percent economic growth rate despite investing over US$ 200 billion for Covid-19 related expenses and hope to increase this to 6.5 percent in the first quarter of 2021.
Some of the key points in the To Do List: Ensure the maintenance of mid-single digit inflation; Ensure stability of interest rates and the exchange rate; Continue steps to curb prohibited pyramid schemes and other financial scams; Strengthen the Central Bank balance sheet with gradual rollback measures and the buildup of external reserves; Introduce Directions on IT Risk Resilience of Licensed Banks; Strengthen off-site surveillance and improve risk management framework including Governance in FIs; Increase the frequency and modes of public awareness; Launch a green financing facility; Strengthen regional development initiatives; Develop new Regulations on Financial Consumer Protection under the Monetary Law Act and introduce a user friendly online complaint submission portal through the CBSL website and social media.