Economic elephant now in Sri Lanka’s room: CB Governor

“The economic elephant in the room is the situation of the country and it should not deviate from the present consolidation process despite any political challenges for progress and growth,” Central Bank (CB) Governor Dr. Indrajit Coomaraswamy said in Colombo on Tuesday.

Inaugurating the development process for Sri Lanka’s National Financial Inclusion Strategy (NFIS), he noted that no country has achieved economic development without political stability.

The restoration of political stability is of paramount importance and it is particularly important at this juncture, he emphasised.

Dr. Coomaraswamy revealed that “the country was beginning to see some progress in the economy in a positive direction towards improving macroeconomic fundamentals and putting in place a framework that could give the country sustained growth”.

He pointed out that the inflation has come down to 4 to 5 per cent and the external stability of the economy is on the verge of strengthening with foreign reserves increasing to US$8 billion at the end of last year from $6 billion in 2016.

Macroeconomic stability is in the right direction and the framework for sustainable growth is now in place, he disclosed.

Financial inclusion refers to access to an appropriate range of financial services at a reasonable cost provided by a number of responsible and sustainable financial institutions.

According to the CB, the NFIS is scheduled to come into effect in the mid part of next year and main focus will be on digital finance including the National Payment Platform (NPP).

Sri Lanka is joining more than 60 countries in the world that have launched or are in the process of developing national financial inclusion strategies.

Dr. Coomaraswamy said that Sri Lanka has already made considerable progress in financial inclusion as there is high level of physical access to financial institutions in the country with bank branch density currently standing at 18.6 branches for every 100,000 adults.

Further, around 83 per cent of the adult population in the country has accounts with formal financial institutions and more importantly the same percentage of women also has accounts at formal financial institutions.

He pointed out that despite the relatively better financial inclusion compared to its regional countries Sri Lanka faces several blockages in achieving greater financial inclusion.

“For successful implementation of this process high level political commitment is essential,” he said.

IFC Country Manager for Sri Lanka and the Maldives Amena Arif disclosed that Sri Lanka has performed better in financial inclusion compared to the other countries in the South Asian region.