The forecast is more optimistic than the International Monetary Fund’s projection of a contraction of around 3% in 2023 and growth of 1.5% next year.
“Several inherent weaknesses” and “errors in policy” have contributed to the severe economic problems engulfing Sri Lanka, the country’s central bank said in its recent annual report. The economy will shrink 2% this year, but will grow 3.3% in 2024, it forecast. Debt restructuring can pose short-term challenges in the financial sector.
“Although the remedial measures have affected the vast majority of citizens for the foreseeable future, they are necessary to protect the economy and economic actors from the devastating consequences that could result from the impact of the pandemic. Unbridled economic turmoil, such as hyperinflation, a much deeper collapse of economic activity, and a full-blown decline. disconnected the country from the rest of the world, with far worse consequences for people and businesses,” the Central Bank of Sri Lanka (CBSL) report noted.
However, debt restructuring could pose short-term challenges in the financial sector that need to be proactively addressed by governments and central banks.
The expected normalization of foreign exchange flows and completion of debt restructuring in 2023, and sweeping reforms in the public sector, are expected to pave the way for the country’s progress towards to an improved and sustainable economic outlook, it added.
Fiber2Fashion (DS) News Desk
