Six month Roadmap to spur economic growth-by Shirajiv Sirimane

Six month Roadmap to spur economic growth-by Shirajiv Sirimane

Six month Roadmap to spur economic growth-by Shirajiv Sirimane

Source:Dailynews

‘The Six Month Roadmap for Ensuring Macroeconomic and Financial System Stability’ presented yesterday will bring immediate solutions to some of the current burning issues, said Governor of the Central Bank of Sri Lanka (CBSL) Ajith Nivard Cabraal.

He said that firstly the CBSL will remove the 100% Cash Deposit Margin Requirement on 600 items imposed earlier on import of non-essential goods. “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,” Governor said.

He said plans would be in place to unwind moratoria gradually and devise long-term plans to support businesses affected by the Pandemic-related lockdown. Measures will be taken to Stop Parate Executions and the Repossession of Vehicles in the next six months for pandemic-affected borrowers.

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.”

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 stressed.

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’

He said that Six Month Roadmap is spelt out to bring about immediate solutions to critical issues and a border ‘one year’ Road Map would follow leading the country towards more stability.

The Governor once again re-capped that there should not be any fears with regard to a scarcity of oil and the CBSL will shoulder the burden of financing it. The Governor said that they hope to maintain a 5% economic growth rate despite investing over US$ 200 billion for COVID-19 related expenses and hope to increase this to 6.5% in the first quarter of 2021.

Commenting on international ratings, he said since the pandemic 123 countries have been downgraded. “On the foreign reserves too, rating agencies have painted a negative picture of Sri Lanka and have not taken into account the large number of inflows that are coming to Sri Lanka to boost the reserves.”

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; Introduce a user friendly online complaint submission portal through the CBSL website and social media; Establish ‘Credit Counselling Centres’ and ‘Investment Advisory Centres’ at Regional Offices; Facilitate the setting up of “Equity Funds” to support stressed businesses and thereby avoid the increase of NPLs; Discontinue cash margin deposit requirements on “non-essential/non-urgent imports” with immediate effect; Consider the possibility of buying back the entire issue of International Sovereign Bonds (ISBs) maturing in January 2022 and/or July 2022, if high discounts are prevalent in the market.

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