Sri Lankan economy expects to make a notable recovery

Sri Lankan economy expects to make a notable recovery

5 March 2021 07:11 pm

The Sri Lankan economy is expected to make a notable recovery in 2021, supported by policy stimulus and improving business sentiments, Central Bank announced. 

 Given the low inflation environment, the Central Bank is in the process of actively supporting the Government’s economic agenda focused on developing a production-based economy. 

Positive sentiments fuelled by the COVID-19 vaccination drive in the country and the impact of growth promoting policies are expected to support the economic revival over the short to medium term Central Bank Governor Prof W.D Lakshman.  . 

The external sector performance is being closely monitored by the Central Bank The trade deficit contracted by US dollars 2.0 billion in 2020 benefiting from the notable decline in expenditure on imports, which more than compensated the decline in earnings from exports, he told a media  conference in Colombo today.(Thursday 04)  

The trade deficit is expected to remain compressed in 2021, supported by appropriate measures taken by the Government. 

Workers’ remittances continued to increase steadily from mid 2020, recording an annual increase of 5.8 per cent, and a further growth of 16.3 per cent in January 2021, from a year earlier. 

The tourism sector is expected to gradually recover in 2021 along with the rollout of vaccinations locally and globally.

\The exchange rate has recorded intermittent volatility, and the Central Bank has taken steps to dampen excessive speculation causing such volatility in the foreign exchange market. 

The Sri Lankan rupee has depreciated by 4.5 per cent against the US dollar thus far in 2021 following the 2.6 per cent depreciation in 2020. Gross official reserves were estimated at US dollars 4.8 billion, with an import cover of 3.7 months, at end January 2021. 

Discussions are continuing on securing foreign financing. Furthermore, increased non-debt creating foreign exchange inflows are expected, supported by the measures introduced by the Government and the Central Bank, 

In spite of adverse speculation, all debt service obligations of the Government have been duly met thus far in 2021, and the Government remains committed to maintaining its impeccable debt service record in the future as well.