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Sri Lanka’s economy stabilizing and gaining investor confidence says Central Bank Governor

Sri Lanka’s economy stabilizing and gaining investor confidence says Central Bank Governor

Governor of the Central Bank of Sri Lanka, Indrajit Coomaraswamy has reportedly said that Sri Lanka’s economy is on a stabilizing path and gaining confidence of investors and domestic interest rates are also falling.
“The economy continues to stabilize in broad terms,” Coomaraswamy has told reporters.
He has said the budget was improving with the deficit coming down and heading for a surplus in the current account.
The Governor has been quoted as saying that the International Monetary Fund’s executive board has just approved the third review and both Fitch and Standard and Poor’s has lifted a negative outlook on Sri Lanka’s rating, recognizing the gains made.
A sovereign bond sold at a 620 basis point risk premium over the US Treasuries yield last year is now trading narrower at 550 basis points, Coomaraswamy has said.
Moody’s has kept the rating unchanged. Moody’s also warned that Sri Lanka may not be able to collect much more forex reserves, after proceeds of the Hambantota port sale ends.
However foreign reserves stock are related to the credit cycle and when the central bank stops printing money and domestic credit slows it is easy to collect forex reserves.
On average the central bank is buying about 200 million dollars from forex markets a month at the moment, Coomaraswamy has said.
As of December 27, Sri Lanka’s forex reserves had topped 8.1 billion US dollars but after some year-end payments, Sri Lanka would end the year with about 7.8 billion US dollars in reserves, Coomaraswamy has added.
According to the Governor, Sri Lanka’s exchange rate has also stabilized. The rupee had depreciated 1.9 percent against the US dollar this year.

OSL take:

The statement by the Central Bank Governor is an endorsement of Sri Lanka’s economic stability. The continuous growth recorded by the Sri Lankan economy is undoubtedly confidence booster for foreign investors looking at entering the country’s economy.

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Article Code : VBS/AT/20180102/Z_2

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