Central Bank of Sri Lanka has taken several operational and policy measures to support the economy, the financial system and the general public in the midst of the COVID-19 pandemic.
Being the apex financial institution of the country, the Central Bank provided its full scope of essential services to the economy and the financial system during the lockdown.
The Central Bank actively took steps to ease the burden on the general public during this unprecedented disruption of global scale, while preserving the focus on its legal mandate to maintain economic, price and financial system stability.
“These include, but are not limited to, the following measures: 1. reduce interest rates, enhance market liquidity, and finance the government 2. Manage foreign exchange flows, maintain exchange rate stability and preserve international reserves 3. Maintain financial system stability and enhance credit flows 4. Ensure uninterrupted currency operations and payments and settlements activities, and 5.manage the public debt, CBSL said in a release.
Some of these measures were introduced to operationalise the decisions taken by the government.
Measures to reduce interest rates, enhance market liquidity, and finance the government were aimed at supporting economic activity in the context of a low inflation environment.
Liquidity injections have been allowed to remain in the money market without being absorbed by the Central Bank in order to expedite credit flows.
Lower interest rates reduced the burden on borrowers who were facing various difficulties, while announced debt moratoria and working capital loan schemes provide extraordinary concessions to businesses and individuals.
The Central Bank also provided required financing to the government to overcome fiscal stresses arising from the shortfall in government revenue and increased expenditure.
This funding enabled the government to provide social security payments for a large share of the population and make payments in relation to essential health and other public services.
The full relief measurers taken by CBSL can be viewed on https://www.cbsl.gov.lk/en/news/the-central-bank-of-sri-lanka-s-covid-19...
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