Guiding macroeconomic fundamentals on desired path, a priority – CB Governor Cabraal | Sunday Observer

Guiding macroeconomic fundamentals on desired path, a priority – CB Governor Cabraal

19 September, 2021

The Central Bank’s urgent priority will be to provide clarity with regard to the expected levels of Sri Lanka’s macroeconomic fundamentals and to guide the movement of such macro-fundamentals on the desired path, and thereby ensure stability in the financial sector, said Central Bank Governor Ajith Nivard Cabraal who assumed duties as the 16th Governor of the esteemed institution on Thursday.

All economic stakeholders expect the Central Bank to provide clear and firm guidance, particularly at turbulent times, such as the current times, Cabraal said, adding that the Bank will also need to be prepared to take steps that will reflect its own commitment towards that objective, and will, therefore, soon announce a policy package in the form of a short-term Road Map, that could then be followed by all stakeholders. However, an uphill task lies for the new  chief of the banking and financial sector regulator to restore stability and help revive the economy with a depreciating currency, inflation and a crippling foreign debt burden.

The country’s debt burden rose from around 39 percent of Gross National Income  in 2010 to 69 percent in 20019, according to the World Bank.

Cabraal who was former State Minister of Finance and Capital Market Development resigned from his post to return to his former position of being the Governor of the Central Bank, the position he held for nearly nine years. Immediate past Governor Prof. W. D. Lakshman stepped down from his post on September 14 after a short stint spanning nearly two years. 

In a zoom meeting last week, Prof.  Lakshman declined to comment on speculation that he was asked to resign.

“If you  look at what happened over the past two weeks, this also played a role in my decision. If I decide to open up, I will comment on the reasons for my retirement, later,” he said.