Cabraal explains way forward amid challenges

by Sanath Nanayakkare

If we opt for a debt restructuring programme with the support of the IMF, it will take another 10 years for us to emerge from the consequences related to such a move, so we must explore all ways in partnership with all the stakeholders of the economy and every citizen of this country to rally round a home grown solution to come out of the current economic crisis, Central Bank Governor Ajith Nivard Cabraal told a webinar hosted by the Advocata Institute on Saturday.

“We need not make unnecessary turbulence by going to the IMF. We are able to deal with the situation. We have enough local economic think tanks who do know about this country and how best a solution to the present crisis can be evolved. If we invite the IMF to come in, they will come with a prescription. That is not what we want right now. With a potential arrival of the IMF, our tourist arrivals won’t increase. We have been able to successfully conduct the vaccination drive without them.” he said.

“We have stabilized the value of the rupee against the U.S. dollar not because they asked us to do so. We maintained a low interest rate regime for economic recovery not because they recommended it. If they come in, they will ask us to stabilize the rupee at a different value. We need space for that.”

The Governor said that he and his team at the Central Bank have not only understood the issues, but also have explored ways to resolve the issues.

“When analysing the economy, everybody has an angle of his or own according to their aspirations. Our undertaking is to balance all these competing interests and allow the economy to move forward progressively. The two main things that we have on our minds are economic growth and stability. We will ensure growth and stability in the next 3-4 months. We will unveil the plan on how to do that when we roll out the Road Map on October 1.

When asked about debt repayment challenges , he said, “We can always roll over because we have instruments to do so.”

When asked whether there was a Balance of Payments crisis looming due to excessive money printing, he said, ” It is like doing an open heart surgery. The surgeons know when to open the heart, perform the operation properly and close it. Likewise, we know how to deal with it. We jnow when to give an economic stimulus and how to wrap it up. Money printing has now reached its maximum point. We will now ensure a soft landing,”

The Governor said the country’s under-utilized assets will be vested in investors to add their real value to the economy.

When asked about the transfer of the Secretary to the Monetary Board of the Central Bank Ms. K.M.A.N. Daulagala, the Governor said that it was in line with periodic changes, implying that the change was based on service requirements. He went on to say that if someone is not willing to move on, that also could convey a message.

Notably, the Governor emphasised the point that all citizens should contribute to the growth of the economy in their own way meaningfully.

Dhananath Fernando, the Chief Operating Officer of Advocata conducted the virtual interview.