Economic situation will worsen if political stability is not established soon – CBSL chief

The Governor of the Central Bank of Sri Lanka (CBSL) Dr. Nandalal Weerasinghe says that the economic situation in the country will become much worse if political stability is not established soon. 

Addressing a press briefing in Colombo today (11), he stated that the prevailing situation, the acts of violence and the failure to maintain law and order in the country, will in no way help Sri Lanka to get out of its current economic crisis.

He also said that a stable political situation in the country is essential for the economy to recover.  

The central bank chief said that they are hoping the present situation can be resolved in a constitutional manner and democratically as soon as possible without any further delay and establish political stability. 

“As the Central Bank, we have to state that if such a stable condition cannot be achieved within a very short period of time, the existing situation would worsen further,” he said.

He said that already there is a foreign exchange crisis in the country and even now there is a shortage of certain essential items while fuel and gas stocks are available to a certain extent at this moment and power cuts are limited to around three hours. 

However, if this situation continues for another two or three days, the country can expect the durations of power cuts to return to 10-12 hours once again and for much severe shortages of fuel and more queues for gas cylinders, leading to more protests and public outburst. 

“We the central bank hope there will be political stability sooner and as a result we will be able to get back to our normal policies implementing so that we can at least find some foreign exchange to address these current shortages of essentials.” 

“And once we reach an agreement with the IMF and even for that, even for us to make progress in debt restructuring we need a stable government, the cabinet, the parliament, the prime minister and the finance minister; all are needed.”

“Without that kind of an administration, it is very difficult for us to make any progress. That is why I also again emphasize the urgent need to have this kind of an administration and also have proper law and order in the country so that everyone can engage in their normal day-to-day activity.”

He said that the President and all the Members of Parliament have to get together and come up with a workable solution sooner and without that there will be a much more difficult situation and “there will be no progress made in the country and everyone will have to experience more pain going forward if we don’t have a solution soon”.

Dr. Weerasinghe also said that he will step down as the Governor if political stability in the country is not established within a week or two. 

Responding to a question, he said that when he assumed duties one month ago his personal expectation was that the situation would stabilize within two weeks and then they would be able to continue their economic programme successfully. 

However, despite the passing of one month the situation has only worsened, he said, adding that he has informed all political parties that if they fail to come together and bringing about some form of stability, no one will be able to rescue the country’s economy, be it him or anyone else. 

The governor said he personally told them that if this situation continues and there is no solution within the next week or two, he will no longer remain in his position.