Sri Lanka will be able to manage the inflationary pressures if global oil prices remain at around US$80 a barrel through the end of this year, the Governor of the Central Bank of Sri Lanka (CBSL), Nandalal Weerasinghe has said.
“If oil prices remain around US$80 a barrel through towards the end of this year, then we can manage the situation. If there are any surprises then obviously we will have a challenge,” Governor Weerasinghe said in an interview in Sydney, Australia.
His comments come as Sri Lanka continues to deal with the impact of higher global energy prices, which have contributed to inflationary pressures and put pressure on the local currency.
Inflation expected to move towards 5%
Governor Weerasinghe said Sri Lanka’s inflation is expected to slow towards the Central Bank’s 5% target during the second half of this year and into next year.
He attributed the improving situation partly to monetary policy measures introduced by the Central Bank in May, as well as government measures aimed at curbing imports.
The Central Bank raised its benchmark rate by one percentage point in May to contain credit demand amid rising global energy prices. It subsequently kept its overnight policy rate unchanged in July as policymakers sought to balance price stability with economic growth.
Growth expected to moderate
Despite continued global uncertainty, Governor Nandalal Weerasinghe said tighter monetary conditions and higher prices were not expected to have a significant adverse impact on Sri Lanka’s economic growth.
He expects growth to moderate to around 4% to 5% in the second half of this year.
Sri Lanka is still recovering from the economic crisis that culminated in the country’s sovereign default in 2022 and its entry into an IMF-supported programme.
Governor Weerasinghe said Sri Lanka is expected to fully complete its four-year IMF programme in the second half of 2027, with the next review expected around November or December this year.
The CBSL Governor was speaking in Sydney while participating in a Sri Lankan delegation seeking to attract investment to the Colombo Stock Exchange.
– with Agencies inputs --
