CBSL Governor calls for political stability to rescue economy

… warns he will have to resign if chaos continues

Extended power cuts possible if political instabilty persists

Curtailment of expenditure on imports necessary for economic recovery

Sri Lankan economy would collapse if political stability was not restored soon, the Governor of the Central Bank of Sri Lanka (CBSL) Dr. Nandalal Weerasinghe, said yesterday.

Dr. Weerasinghe warned that he would be left with no alternative but to resign within two weeks if political instability continued. He warned that the prevailing political instability, acts of violence and the failure on the part of the State to maintain law and order had made it harder for Sri Lanka to overcome the current economic crisis.

Political stability was essential for economic recovery, said the CBSL chief, adding that when he assumed duties as the Governor, it was thought that the economy could be stabilised soon, but the unfolding events would put paid to efforts that the Central Bank and the Finance Ministry were making to straighten up the economy.

Dr. Weerasinghe said that when he assumed duties one month back, he expected political stability to be restored within two weeks, and they would be able to implement their economic programme.

If all political parties did not come together, no one would be able to rescue the c economy, whoever held the post of the Central Bank Governor, Dr. Weerasinghe said.

“As the Central Bank, we have to state that if such a stable condition cannot be achieved within a very short period of time, the existing situation would worsen further,” he said.

He also said that there was so much that the Central Bank could do and that a solution to the crisis could be achieved by only policy makers.

“There is a serious shortage of foreign exchange in the country and already there is a scarcity of some essential items. Although fuel and gas stocks are available to some extent and power cuts are limited to around three hours, things can change for the worse soon,” he warned.

“If this situation continues even for another two or three days, there will be 10-12-hour power cuts again. We will see a severer shortage of fuel. We will see longer queues for cooking gas. This will lead to more protests and social unrest. We at the Central Bank hope there will be political stability soon so that we will be able to implement our policies and find some foreign exchange to address these current shortages of essentials.”

Dr. Weerasinghe said that Sri Lanka needed a stable government, a Cabinet, a functioning parliament, a prime minister and a finance minister to reach an agreement with the IMF.

“Without a stable administration that is respected by the people, it is very difficult for us to make any progress. This is why I have been repeating the urgent need for a stable administration and law and order in the country so that everyone can engage in their normal day-to-day activity,” he said.

The President and all the Members of Parliament have to come together and find a workable solution soon without placing the country at a bigger risk, he said. “Otherwise, there will be no progress and everyone will have to undergo more suffering.”

Dr. Weerasinghe also urged people to reduce the consumption of imports. If someone needs to buy a mobile phone, a TV or a refrigerator, he or she should wait a month or two, he said. “There are many items in showrooms despite import restrictions. They are also trying to make undue profits. I think people should cut down on these purchases. If we don’t spend money on these, we will have more money for essentials. Also, vendors will have to reduce prices. Remember what happened to cement; traders stocked up and jacked up prices, but because people didn’t buy, cement prices plummeted.”