No need to raise interest rates, seek IMF funding: CB Governor

Governor_of_the_Central_Bank_Arjuna_Mahendran

Nov 24, 2015 (LBO) – Sri Lanka has no need to raise interest rates at the moment given the loose monetary policy being followed in regional countries such as India, Central Bank Governor Arjun Mahendran said.

He was speaking at a post-budget forum organized by HSBC.

Although credit growth to the private sector was high it did not warrant a hike in rates. Sri Lanka cannot hike rates while India is reducing rates, he added.

Commenting on the IMF Mahendran said: “Having the IMF on the side basically brings everybody else into alignment.”

Sri Lanka has not received substantial funding from the World Bank, Japan or other donors in recent years and that that money is waiting to come back, he said.

“Whether we apply for a loan or not, that is a different issue. Right now we don’t need the money,” he said.

Sri Lanka’s Central Bank on behalf of the government raised 1,500 million dollars through a 10-year international sovereign bond in October which has supported foreign reserves despite a balance of payments deficit this year tied to dollar outflows.