Central Bank Governor Indrajit Coomaraswamy speaking to Bloomberg TV yesterday said that the country was already seeing a great deal of normalcy.
“Already we are already seeing a great deal of normalcy. The Central Bank is working. Our payments and settlements systems, our international operations, our domestic operations are all running. The country’s financial system will work through the day.”
Coomaraswamy was speaking to Bloomberg TV on 23 April. In response to a question of the impact of the bombs on tourism, he said “The tourism sector over 30 years (civil war) has gained a great deal of experience and expertise on how to keep people safe. Those drills and processes will be switched on again.”
When questioned about whether there would be an impact to international debt payments Coomaraswamy said “much of the obligations that need to be met this year were front loaded into the first quarter of this year, more than half. We have gone to the market and (already) raised the money required. The macroeconomic fundamentals are very much intact.”
Coomaraswamy said in the coming weeks a host of measures to reduce market interest rates will be announced. The CBSL will shortly give leeway to banks in terms of IFRS 9 for SME loans.
Coomaraswamy said, “last year like a number of economies with current account deficits we did experience a great deal of stress in the external account. (Due to) remedial action taken by the authorities, the central bank and the government we have seen a significant turnaround.
The trade deficit has halved, the rupees has appreciated by 4.5%. Inflation is right in the middle of our 4-6% target.”
Coomaraswamy said “The government has introduced a budget during an election year has set out a budget which is very much within the set-out framework. This has meant that we have been able to reach a staff-level agreement with the IMF on the extended fund facility.
We expect the IMF’s executive board to pass the 5th review of the facility in the middle of May.” Coomaraswamy said that there would be a new monetary law act bringing greater autonomy to the Central Bank, a modern banking act and that there was a lot of justification for a rate cut in May.
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