“Sri Lanka Has Room to Respond to Global Shocks” - CBSL Chief

COLOMBO (News 1st); Sri Lanka’s economy is on track for a period of renewed stability and growth, with inflation expected to reach target levels and economic expansion projected at 4.5% this year, according to Dr. Nandalal Weerasinghe, Governor of the Central Bank of Sri Lanka.

Speaking on the country’s economic outlook, Dr. Weerasinghe noted that inflation is firmly on course to settle near the Central Bank’s target within the next year. 

“With inflation at 5%, we have reached the target. The policy rate is 7.75%, maintaining a positive real interest rate of about 2.75%. This gives us ample room to adjust and support the economy should the need arise,” he said.

The Governor emphasized that the current monetary policy framework provides a buffer against potential external shocks, allowing the Central Bank to respond effectively if global or domestic conditions change.

On the fiscal front, Dr. Weerasinghe highlighted the importance of revenue-based fiscal consolidation and ongoing reforms of state-owned enterprises (SOEs). 

He stressed that a stronger revenue base—achieved by broadening the tax net, improving compliance, and modernizing tax administration—is essential for debt sustainability, fiscal space, and investor confidence.

He also pointed to the positive impact of SOE reforms, particularly cost-reflective pricing, which has eased the burden on the treasury and taxpayers. 

“Continued SOE reforms and sustained revenue mobilization will be critical to ensure public finances remain stable, freeing resources for priority investment and enhancing resilience against future shocks,” Dr. Weerasinghe added.