Licensed Commercial Banks can also finance essential imports - Cabraal

COLOMBO (News 1st); Sri Lanka's Central Bank Governor Ajith Nivard Cabraal said that the Monetary Board decided to increase policy rates after five months to deliver a message that inflation was being dealt with and that the external sector needs to be stabilized further.

Cabraal was speaking at a press conference at the Central Bank on Thursday (20) after the Monetary Board decided to increase the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 50 basis points each, to 5.50 percent and 6.50 percent, respectively.

Responding to a question by News 1st, the governor said the USD 500 Million settlement of sovereign bonds was made from the reserves and from the inflows that Sri Lanka receives.

As a measure to address the USD crisis in Sri Lanka, the Central Bank has reached an agreement with the Licensed Commercial banks in the country allowing them to bear the financing and arrangement of the financing of essential goods, to bring greater stability.

The monetary board had decided to distribute the financing of essential import bills for fuel purchases among the licensed banks in proportion to their foreign exchange inflows.

He said that the Chinese SWAP is within Sri Lanka's range of products and currencies, noting that it was moved into the reserves.