CBSL Chief charts course of Sri Lanka’s economy at AmCham Sri Lanka forum

Central Bank Governor Dr. Nandalal Weerasinghe (left) gestures during the AmCham Sri Lanka Members Forum titled “Charting Sri Lanka’s Economic Course” as moderator Bank of Ceylon Chairman and former AmCham Sri Lanka Board Member Kavinda de Zoysa looks on 

AmCham Sri Lanka President Shirendra Lawrence (left) presents a memento to Special Guest Treasury Secretary Mahinda Siriwardana at AmCham Sri Lanka Members Forum titled “Charting Sri Lanka’s Economic Course”

We are building reserves, achieving Primary Balance and Current Account surplus apart from fiscal consolidation. These achievements are despite the change in political administration whilst reforms, stability and growth-infusing measures are continuing – CBSL Governor 

Dr. Nandalal Weerasinghe

• Assures CBSL and Govt. creating necessary buffers in multiple ways to cushion from external shocks
• Urges private sector to do same as a proactive measure; Stresses “Be positive and be prepared”
• Calls for greater diversification of markets, products thereby minimising risks to businesses
• Reveals G2G talks on US import tariff have been positive
• Dismisses as myth the perception that SL will revert to a crisis being unable to pay external debt after relief period lapses in 2027
• Points to SL servicing bilateral debt uninterruptedly and interest components in restructured debt
• Recalls prior to crisis, SL serviced $ 6 b debt with $ 8 b reserves
• Debt service commitment for 2025 is $ 2.75 b as reserves have been built up to $ 6.5 b
• Stresses authorities have established fiscal credibility as well as better predictability in terms of inflation
• Urges policymakers must ensure consistency in pursuing right policies and continuous strengthening of institutions

 By Nisthar Cassim

Central Bank Governor Dr. Nandalal Weerasinghe on Monday urged the private sector to build their own buffers in multiple ways to manage the impact from external shocks taking cue from the Government.

Speaking at the AmCham Sri Lanka organised forum, Dr. Weerasinghe said the country in the recent months has managed to build necessary buffers in terms of appropriate monetary policy, enhancing reserves and pursuing prudent fiscal management to face any short-term external shocks which are beyond Sri Lanka’s control. He pointed to the announcement of a new import tariff regime by the US as one of the external shocks.

“Likewise the private sector must create its own buffers to face any short term shocks whilst addressing long-term goals,” CBSL Chief said.

He suggested the private sector in the long-term should diversify markets and products, move to different value chains thereby minimising risks to businesses.

Whilst noting that it was difficult to predict future external shocks, the CBSL Governor also said that both the country and the private sector can only prepare itself to face any eventualities. “Be positive and be prepared,” Dr. Weerasinghe stressed during his keynote titled “Charting Sri Lanka’s Economic Course.”

“Domestically, policymakers must ensure consistency in the pursuing right policies and continuous strengthening of institutions,” Dr. Weerasinghe emphasised adding that these two critical factors were among key learnings from the economic crisis in the country a few years ago.

After his keynote speech, Dr. Weerasinghe also engaged in a Q&A with Bank of Ceylon Chairman Kavinda de Zoysa, who has previously served AmCham Sri Lanka Board when he was working at Citi.

In response to a question from AmCham membership, the Central Bank Governor dismissed the perception that the country will revert to a crisis being unable to pay external debt after the relief period lapses in 2027.

“Collapse of the economy in 2028 is a myth,” emphasised Dr. Weerasinghe.

He noted that despite the external debt pause between mid-April 2022 and late last year, Sri Lanka continued to service multilateral debt. “This year the debt servicing will be around $ 2.75 billion whereas we have reserves of $ 6.5 billion. Prior to the economic crisis and debt pause, Sri Lanka serviced $ 6 billion worth of debt whilst having only $ 8 billion,” recalled the CBSL Chief. In 2022 our debt servicing as a percentage of GDP was 9.5% whereas what is being envisaged is a 4.5% ratio going forward.

In that context as well as positive macroeconomic fundamentals along with improving reserves and higher forex inflows from exports, workers remittances and tourism and Current Account surpluses since 2023, the Governor said Sri Lanka will be able to meet its on-going and future debt servicing requirements satisfactorily.

“The External Debt Restructuring was to garner extra time for Sri Lanka to build reserves and start servicing debt comfortably. I can confidently say going forward there is no excessive burden to service external debt,” he added.

During his keynote, Dr. Weerasinghe also recapped some of the measures put in place to stabilise the economy post-crisis, key milestones achieved and resultant effect of six consecutive quarters of economic growth.

He said that the External Debt Restructuring is almost complete except for foreign debt of SriLankan Airlines which is being addressed. The IMF program is also progressing as scheduled whilst inflation, interest and exchange rates have been well managed. 

“We are building reserves, achieving primary balance and current account surplus apart from fiscal consolidation. These achievements are despite change in the political administration whilst reforms, stability and growth-infusing measures are continuing,” the CBSL Governor stressed.

He noted that the proposal of a new import tariff regime by the US Government was a setback but during the on-going 90-day pause, the Sri Lankan Government has had positive talks both in-person and virtual with the US Trade officials to resolve the issue. “The Government is doing its best and it is important Sri Lanka secures an arrangement that is comparable with some of the other competing nations,” he added. The importance of the private sector engaging and collaborating with its US buyers was stressed by the CBSL Governor.

He said as a short-term response to new challenges, the Monetary Board, as part of building buffers, reduced the Policy Rates in May to stimulate domestic demand. On the fiscal side, Government revenue has remained better than expected. “For once we are achieving our targets or over-performing. We have established fiscal credibility as well as better predictability and transparency in terms of inflation. We are also creating sufficient buffers if needed,” Dr. Weerasinghe said at the AmCham Forum where Treasury Secretary Mahinda Siriwardena was also present as a special guest.

These on-going measures according to the CBSL Governor is on the realisation that one cannot be complacent but must be progressive.

AmCham Sri Lanka’s President Shirendra Lawrence said: “We welcome the Central Bank Governor’s continued commitment to fiscal stability and structural reform, which is essential for investor confidence and long-term economic resilience. As Sri Lanka navigates global headwinds and tariff challenges, it is vital that we build greater competitiveness through digital transformation, market diversification, and strategic public-private collaboration. AmCham Sri Lanka remains dedicated to supporting these efforts and advocating for policies that strengthen US–Sri Lanka trade and investment ties.”

The forum was organised by the AmCham Sri Lanka’s Trade and Investment committee led by HSBC Head of Global Network Banking Dilshan Perera and AmCham SL Director. 

– Pix by Daminda Harsha Perera and Sameera Wijesinghe