No restructuring of domestic debt, says CB Governor

External debt restructuring remained a top priority for the Sri Lankan government, but domestic debt in the form of government securities and Sri Lanka development bonds would not be restructured, Central Bank Governor Dr. Nandalal Weerasinghe announced on Thursday (28).

Dr. Weerasinghe said so, speaking at a meeting of the Committee of the Ceylon Chamber of Commerce, as the Guest Speaker. He also provided an update on the progress made during the discussions with the International Monetary Fund and World Bank, last week.

Noting that encouraging progress had been made towards establishing a macro-fiscal policy framework and initiating structural reforms, Governor Dr. Weerasinghe expressed said staff-level agreement with the IMF was likely to be reached within the next two months.

Dr. Weerasinghe also announced that additional measures would be implemented to address urgent economic concerns. The measures include introducing regulations to encourage USD flows currently transacting in the informal market to be channeled through the formal banking system. As a result of policy measures already introduced by the Central Bank and the government, he said he was of the view that expenditure on imports would further decline to more sustainable levels.

The Governor also highlighted the need to strengthen the social safety net due to the rising cost of living. To this effect, multilateral agencies such as the World Bank would be looking to reallocate funds committed for projects towards assisting vulnerable segments of the population, he stated.

Dr. Weerasinghe said that while expediting IMF negotiations and implementing sustainable economic policy reforms being the main priority, IMF action will continue regardless of the developments on the political landscape. He also stressed that all creditors would be treated equally in the debt-restructuring process. The Governor sought the assistance of the private sector to implement measures to stabilise the economy.