The Central Bank Governor Nandalal Weerasinghe has failed to take a firm decision to prevent the contraction of the economy causing the consumer market to shrink by 60% by April, the Sri Lanka United National Businesses Alliance (SLUNBA) alleged.
The consumer market had shrunk by 40% last December and due to this, the unemployment rate had increased.
The small and medium-sized enterprises (SMEs) will be forced to close their companies and while facing the current situation, the government is requesting that Sri Lanka should downsize the SME facilities, the SLUNBA said.
Therefore, SLUNBA Chairman Tanya Abesundara requested the government to take immediate action to protect the SMEs.
The central bank last year raised the key monetary policy rates by a record high level to curb inflation after the money printing.
The move, however, has hit the overall economy which was already on a downturn due to debt crisis and currency collapse.
The economy registered a real contraction of around 8.0 percent in 2022 and expected to record a gradual recovery from the second half of 2023 and sustain the growth momentum beyond, the central bank said.
But in 2022, at least half a million people lost their jobs, most of which were in the industry and services sectors and employed women, World Bank disclosed.
Those already classified as poor saw a 65 per cent increase in their cost of living, while the increase was 57 per cent for the non-poor, highlighting the significant loss of welfare for all Sri Lankans.
The economic crisis has left deep scars. Poverty nearly doubled in Sri Lanka between 2021 and 2022, climbing from 13 to a staggering 25 per cent (using a poverty line of US$ 3.65 per person per day), and is projected to increase by more than 2 percentage points in 2023.
In the same time frame, urban poverty tripled from 5 to 15 per cent. Sri Lankans have been forced to quickly adapt to a new reality where prospects for a good job are limited, incomes are lowered and eroded by inflation, and opportunities for a better future are becoming increasingly rare.
Meanwhile, National Construction Association of Sri Lanka (NCASL) Chairman Susantha Liyanaarachchi said the government did not control the dollar, but it had controlled inflation and created a recession while contracting the economy.
While describing the devaluation of the dollar and appreciation of the Sri Lankan rupee, he said the Etham market had not operated since March 2022 and the dollars in Sri Lanka had been saved.
“The dollar exchange rate was reduced, and people were forced to release their dollar reserves because they couldn’t get more Sri Lankan rupees. Now people have no buying power. People do not have rupees in their hands,” he said.
