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UNDP says Financial Literacy helps alleviating debt vulnerabilities in Sri Lanka

May 22, Colombo (LNW): The Central Bank of Sri Lanka identifies a significant gap between satisfactory financial knowledge and lacking financial behavior among Sri Lankans, as highlighted in the Annual Economic Review of the Central Bank 

To address this, the Central Bank initiates a collaborative effort, resulting in the development of a comprehensive five-year Financial Literacy Roadmap 2024-2028 involving over 40 stakeholders.

Data from the recently launched Multidimensional Vulnerability Report (in collaboration with Oxford University) reveals that over half of Sri Lankans are multidimensionally vulnerable.

Azusa Kubota, the Resident Representative of the United Nations Development Programme (UNDP), addressing a gathering at the launch of the Financial Literacy Roadmap by the Central Bank of Sri Lanka said that approximately 70% of Sri Lankans have had to reduce at least one meal per day due to economic strain.

The report also revealed that 33.4% of the population experiences vulnerability related to household debt, often incurring debt for essential needs like food, medical care, and education, she added.

Roadmap, a cornerstone of Sri Lanka’s National Financial Inclusion Strategy (NFIS), offers evidencebased guidance to all stakeholders engaged in financial literacy initiatives, aligning them towards a common objective: improving the financial behaviour of Sri Lankans and bolstering their financial resilience.

 Developed through collaborative efforts among various stakeholders, led by the Central Bank through the NFIS Secretariat under the Regional Development Department, the Roadmap sets out to foster financial inclusion, enhance consumer protection, and fortify financial stability.

With a focus on nurturing better financial habits and enhancing overall financial capability among Sri Lankans, the Roadmap seeks to encourage informed and responsible usage of the diverse range of financial products available in the local market.

 It also emphasizes the cultivation of prudent and responsible financial behaviors, recognizing the significance of shaping the financial mindset of futuregenerations amidst today’s economic landscape.

Complementing the Roadmap is a comprehensive action plan, comprising sequenced actions collectively agreed upon by Financial Literacy Stakeholders. 

The Action Plan delineates their respective institutional roles and responsibilities, ensuring the effective implementation of the Roadmap.

 Furthermore, the United Nations Development Programme stands as a vital partner, providing both technical expertise and financial support for the realization of this initiative.

Resident Representative of the UNDP Kubota stressed that the economic crisis likely exacerbates these debt situations, with many individuals, especially women-headed households, lacking basic financial literacy.

“Women often sign agreements in languages they do not understand, unaware of their rights and responsibilities, leading to poor financial decisions,” she explained.

She advocated for financial literacy programs, debt management strategies, and livelihood diversification to mitigate these acute vulnerabilities.

“Financial literacy is crucial in alleviating the challenges faced by many communities in Sri Lanka,” Kubota asserted.

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