CBSL to engage with multilateral agencies including IMF

Colombo (News 1st): The Central Bank in its 8th and final Monetary Policy Review for 2019, decided to maintain its Standing Deposit Facility Rate and the Standing Lending Facility Rate at their current levels of 7.00% and 8.00% respectively. CBSL Plans to engage with multilateral agencies including IMF Addressing the gathering, newly appointed Governor of the Central Bank Deshamanya Prof. W. D. Lakshman spoke about plans on engaging with multilateral agencies including the International Monetary Fund. He noted that he is committed to sustain and add to this institutional greatness. During his speech, he made particular reference to his immediate predecessor, Dr Indrajit Coormaraswamy. He added that Coomaraswamy has contributed a great deal to re-establish the bank's respect within our socio-economic system. He went onto note that in the external sector sluggish performance, dependence on debt inflows in the absence of adequate levels of FDI inflows is a major concern. He said in this context, they hope to engage with the IMF and other multilateral agencies while remaining in the framework of national policy. The governor also spoke about the Washington Consensus, which refers to a set of free-market economic policies supported by prominent financial institutions such as the International Monetary Fund, the World Bank, and the U.S. Treasury. He noted;

"The neo-liberal policy set that we have been working on so far. I hope to be able to make my contribution in this search for alternatives, working together with the other authorities. Questions are being raised about the validity and relevance of Washington consensus type on neo-liberal type of policies to achieve the desired goals of inclusive development."

SL's expected economic growth in 2020 Governor W.D. Lakshman said Sri Lanka, is expecting 4.0 to 4.5% economic growth in 2020 and a higher 6.5% growth beyond 2020. Director of Economic Research Chadranath Amarasekara said growth is likely to be around 2.7 to 2.8 % in 2019. Senior Deputy Governor Dr P. Nandalal Weerasinghe responded to questions raised by journalists. He noted that the total external debt repayment in 2020 is around US$ 4.8 billion. He added that one large repayment out of the total external amount next year is a repayment of an ISB, in October. He said this year they have raised a sufficient amount of money to meet the expenses of the first few months of the new year. Senior Deputy Governor Dr P. Nandalal Weerasinghe also expressed the following views:

"There are some banks, those who have not complied with the direction in terms of basis points. Next week onwards, we will start imposing certain penalties or sanctions, for banks that have not complied with this. There are seven banks, out of those banks, there are three big banks, Sampath, Peoples Bank, and DFCC, they will have to bring down rates by more than 50 basis points by the end of this year. If not it will trigger certain actions that we have to discuss with the monetary board."

The Deputy Governor spoke about loan capital moratorium for small and medium-scale (SME) businesses.

"This is available only on the request of the customer, and that’s why we can’t estimate the impact. Before January 20, those who want to avail of this facility will have to go to the bank and make a request.This is more of a restructuring of the existing loan. We are only extending the capital repayment period for 12 months.So there is no reduction in the value of borrowing."

The circular on the regulation setting out the exact terms and conditions of the moratorium will be announced by next week. The new scoring system that is to be introduced to the Credit Information Bureau or the CRIB from next year, will be issued on January 9th next year. The Central Bank's road map for 2020, is due to be released on January 6th, 2020.