Central Bank’s amended Monetary Law Act ready by end 2018
The Central Bank ( CB) is seeking to amend the Monetary Law Act to support flexible inflation and these amendments will be ready by the end of the year, CB Governor Indrajit Coomaraswamy has said. The cabinet has approved the framework for the amendments and the amended law will come into force by the end of this year, he added.
“The legal and accountability framework built into the amended act involves greater independence to the Central Bank. Greater accountability on one hand and greater independence on the other hand is the ideal way forward,” noted Dr. Coomaraswamy.
He made these remarks at a recent, well- attended gathering in Colombo. The occasion was the Colombo Development Dialo gues on ‘ Inte g rat e d Development impact through partnerships and innovations’ organised jointly by UNDP Colombo, Dilmah and South Asia Centre of London School of Economics.
Dr. Coomaraswamy stressed that Sri Lanka has been a twin deficit economy because there has been a large demand in the system. “The fiscal consolidation and the forward looking mone-
tary policy is a cold turkey that we have to go through. It’s not enough to do the stabilisation measures, you need to have aggressive reforms. The reason why Sri Lanka’s growth rate is low is that in my view our economic reforms have lacked stabilisation,” he noted.
Elaborating further he mentioned that it would have been better if the country was more aggressive in strengthening the
growth rate of the economy. “The great mistake would be to go for artificial pumping up growth which is what we do all the time. You have to break that cycle and the only way to do that is to do the stabilisation and the economic reforms side by side,” he added.
He also stated that adoption and adaptation of technology are the key determinants for the success of countries in the East and
South East Asia. They had clear policy frameworks which Sri Lanka has not done in a coherent way. Often innovation in an economy is driven by Foreign Direct Investment ( FDI) and this is why Sri Lanka has been very unsuccessful in relation to countries in the East in attracting FDI. “You need angel investors, venture capital private equity up the chain to support these startups,” he noted.