Insists CB duty to create liquidity, argues situation would have been worse otherwise Confident monetary policy can tackle liquidity, inflation anchored, no currency depreciation Contends banks would have struggled to help businesses without CB support 2Q to contract but confident growth will pick up in 2H to post 1.5% growth COVID-19 to have mixed impact,
6 b in debt repaid, rest could be helped by
They were also of the view that the economy would perform well in the fourth quarter assisted by the recovery of the global economy.
5% in 2020 despite the COVID-19 impact.The virus would have mixed outcomes for the economy with falling oil prices expected to save as much as
But the current account deficit is expected to worsen with a larger Budget deficit likely for this year, though both are projected to improve from 2021 onwards. Central Bank Governor Prof.
W.D.
Lakshman speaking during the webinar opined that even though
"
"During this year growth rates do not look very good. International agencies predict very low, or negative growth rates this year but I have confidence in the system and the impact of policies being taken as well as gradual recovery from COVID-19. There will be greater confidence entering into the system once the curfew eases, which will be contrary to predictions by
"Our dominant social policies and paradigms have gone through a difficult period and have been hampered by local and international challenges, including the Easter Sunday attacks. We should expect as COVID-19 impact wanes we will be getting back into whatever is normal or 'new normal'.
Let us hope that we will achieve greater success in not just growth but also sharing growth results."
Senior Deputy Governor Dr.
8 billion due to be repaid this year, the Government had already settled
To pay the remaining
"The Government is in the process of discussing external financing plans. Going forward emerging and frontier markets will not have access to international capital markets in the near future.
So there are negotiations to have different facilities in place.
"In 2021 we will have access to international financial markets and can raise more funds to meet debt repayments. We have already assured investors that all payments will be met and we will maintain that going forward.
"
"The role of Central Banks, especially in the extraordinary circumstances surrounding us is to provide sufficient liquidity to the financial system and allow people to have cash in hand during the lockdown. Our responsibility is to provide sufficient liquidity.
If we had not done that imagine the situation? Banks would not be able to smoothen out the virus impact, support businesses and people would not have cash in hand. This is not just something we have done but central banks around the world," he said.
The Senior Deputy Governor defended the liquidity injections pointing out that governments of both developing and developed countries were providing stimulus of 10%-15% of their GDP. Dr.
Weerasinghe also emphasised that the
"Our monetary policy stance will tackle inflation. Demand is low, there is no excess demand in the market, inflation is moderating and it is well anchored and we will be able to maintain inflation between 4%-6%.
Our growth will be well below potential so we will not see any adverse impacts of providing liquidity to the market."It is important for the general public to understand that this is our duty.
If there is excess liquidity it can exert pressure on the currency but that has not been the case. The currency has been appreciating and our interference has been minimal and there is no pressure on the balance of payments," Dr.
Weerasinghe added.
© Pakistan Press International, source