Sri Lanka central bank targets diaspora, currency swaps: interview

Jan 21, 2009 (LBO) – Sri Lanka’s central bank says it will persevere with its quantity targeting regime this year but also use other instruments if needed. It is also negotiating currency swaps with other central banks to have greater access to foreign currency. A weakening economic outlook at home and global economic troubles has made it costlier for the country to seek commercial loans, and the Central Bank which runs the government’s debt office is chasing diaspora funds.

Shamindra Kulamannage from the ETV’s Lanka Business Report show talked with Central Bank Governor Nivard Cabraal about challenges in the year ahead. Excerpts;

LBR: What do you think is the biggest challenge facing the economy this year?

A: Last year we had oil, food and financial shocks. Three shocks that would normally have been spread out over a decade compressed in to one year. So that naturally put us in to a difficult situation which has now stabilized to a great extent. The main challenge this year will be to ensure exports are kept going and to have sufficient economic stimulus to maintain growth. We don’t see much of a problem with regard to inflation. We also have to ensure that exporters as well as importers are made comfortable overall, so