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SL Government sticks to bold economic reforms for stability and growth

In a move set to pave the way for a robust and stable economic outlook, the government will implement a series of reform measures designed to fortify economic growth and ensure enduring stability.

The proposal to this effect submitted by President Ranil Wickremesinghe in his capacity as the Finance, Minister has been approved by the cabinet of ministers after the president presented a comprehensive overview of critical areas 

Discussions covered a spectrum of vital domains including State finance policy, financial stability, energy sector strategies, external sector, debt restructuring, and international funding.

“The President has championed a firm approach to tackling these challenges head-on. The Cabinet meticulously evaluated measures taken thus far, demonstrating a commitment to steering the economy toward resilience,” Cabinet Co-Spokesman and Minister Bandula Gunawardena said 

“These concerted efforts sought to tackle pressing challenges such as inflation, foreign reserves, energy crisis and strategically align policies and resources with the Central Bank and other authorities to ensure the Government’s goal of fostering enhanced economic stability. 

By meticulously addressing identified issues and implementing change, these reform initiatives are poised to make a substantial contribution to the country’s financial health and secure a more promising economic future,” he said.

Noting that there was no second chance for the country to rectify its economic blunders, the President has reiterated that it was critical to bring in the new reforms backed with new laws, and digitalisation to ensure a stable export-led, green economy.

“As Sri Lanka continues its journey towards economic stability and growth, the Government’s commitment to addressing national concerns and prioritising the country’s interests over politics remains crucial. With steadfast leadership and sound policies, Sri Lanka aims to build a resilient and prosperous future for all citizens,” Gunawardena noted.

Meanwhile The Central Bank surprised markets by announcing a key measure to release Rs. 200 billion in liquidity thereby further easing interest rates.

 It said the Monetary Board of the CBSL at its meeting held on 8 August 2023, decided to reduce the Statutory Reserve Ratio (SRR) applicable on all rupee deposit liabilities of Licensed Commercial Banks (LCBs) by 200 basis points, from 4% to 2%, with effect from the reserve maintenance period commencing 16 August 2023.

“This decision was taken with the view to inject liquidity to the banking system and  further reduce market liquidity deficit on a permanent basis, in line with the current  monetary policy stance of the Central Bank,” it said in a statement.

CBSL said this reduction in the SRR is expected to release around Rs.200 billion of liquidity to the domestic money market, which would enable a further downward adjustment in the  market lending rates as a result of the reduction in cost of funds of LCBs, thereby  supporting the expansion in credit flows to the economy.

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