‘Several inherent weaknesses’ and ‘policy lapses’ helped trigger the severe economic problems that engulfed Sri Lanka, the country’s central bank said in its annual report released recently. The economy will shrink by 2 per cent this year, but expand by 3.3 per cent in 2024, it projected.

The prediction is more optimistic than the International Monetary Fund’s prediction of a contraction in 2023 of around 3 per cent and growth of 1.5 per cent next year.

“Although the corrective measures affected the vast citizenry in the near term, they were necessary to safeguard the economy and economic agents from potentially devastating consequences of unrestrained economic instability, such as hyperinflation, collapse of economic activity to a much deeper level, and a complete disconnect of the country from the rest of the world, with far worse consequences to the people and businesses,” the report by the Central Bank of Sri Lanka (CBSL) noted.

However, debt restructuring could pose near-term challenges in the financial sector that need to be addressed proactively by the government and the central bank, it said.

The envisaged normalisation of foreign exchange flows and the completion of the debt restructuring process during 2023, and the sweeping reforms in the public sector, are expected to pave way for the country’s progress towards improved and sustainable economic prospects, it added.

Fibre2Fashion News Desk (DS)

Sri Lankan economy to shrink by 2% in 2023, grow by 3.3% in 2024: CBSL

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