No quick fixes but focus on fundaments: CB Governor

Friday, 29 July 2016 00:10 - - {{hitsCtrl.values.hits}}

Quick fixes for the private sector are not in the offing, Central Bank Governor Dr. Indrajit Coomaraswamy cautioned yesterday, but insisted policymakers and his institution were focused on improving macroeconomic fundaments to bring the first rays of a better future.

He acknowledged that the business community was viewing a rather gloomy picture in the short term, but stressed that the time was right to be committed to creating stronger economic fundaments for sustained growth.

“I don’t think there are quick fixes. I think trying to create a rise artificially; trying to boost asset markets, growth or anything else is not helpful. In the end it creates distortions. So the critical thing is to create the fundamentals to ensure that the economy grows, companies are able to do their business and to net their profits. That there is employment generated that creates demand in business. To have a virtuous cycle, which is created on strong and sound fundamentals,” he said.

“Working with the Government, that is what we at the Central Bank would like to do.”

Harnessing the expertise of the Central Bank along with the five-year economic plan to be rolled out by Prime Minister Ranil Wickremesinghe would give the business community much-needed policy stability and guidance on the future Sri Lanka is heading towards, Dr. Coomaraswamy noted. He stressed that the reform agenda the Government was attempting to implement would turn the investment climate positive.

“The sun is not shining yet, but one could argue that sun is beginning to shine – once the Government has embarked on the stabilisation program. Without stabilisation in the economy, nothing is possible and at the heart of that stabilisation needs to be restored consolidation. This is the problem we had for three to four decades and it seems that the Government is making an effort.”

Once the Government’s reform programme becomes clearer, the Central Bank Governor was optimistic it would promote confidence among the business community and encourage investors, both local and foreign.

“Of course, you have to make an independent assessment of the credibility of the stabilisation program, of the viability of the five-year plan, once you can take that call and see the way forward is positive. So, to reiterate I hope you are not up to any quick fixes,” he said.