Sri Lanka central banker meet mulls stimulus exit strategies

Feb 28, 2011 (LBO) – South and South East Asian central bank chiefs who met in Sri Lanka had discussed ways to exit deficit spending and loose monetary policy adopted during a global downturn, amid rising inflation and property bubbles. Several Asian countries followed their advanced nations counterparts in boosting state spending and money printing for “macroeconomic stimulus” and some fired property bubbles and at least one Asian nation is facing foreign currency shortages.

Governors of South East Asia Central Banks (SEACEN) met on February 25 and 26 in Colombo.

“Governors noted the challenges facing emerging markets during the post-global financial crisis from the perspective of SEACEN central banks,” a closing communiqué issued by the Central Bank of Sri Lanka said.

“These include the exit strategies to phase out the macroeconomic stimulus packages implemented during the recent crisis.

“They observed that any transition strategy must be compatible with the emerging domestic and international environment and should be well coordinated and appropriately sequenced.”

Sri Lanka is one of the countries in Asia that loosened monetary policy only with accompanying tightening of fiscal policy, leaving more room f