Sri Lanka has achieved a significant economic transformation, with inflation rates dropping to below 2% over the past 20 months, surpassing the International Monetary Fund’s (IMF) predictions. The country marked this milestone during the 73rd Anniversary Oration of the Central Bank of Sri Lanka (CBSL), where Sharmini Coorey, a former IMF official, commended the nation’s progress.
The successful economic strategies that drove this change included:
- Implementing a well-organized foreign currency debt moratorium.
- Making strategic interest rate adjustments to avoid a disorderly default.
- Aligning fiscal policies with monetary decisions amidst political challenges.
To ensure fiscal stability, the government increased tax rates, improved tax collections, and introduced energy cost recovery pricing. Experts emphasized that to address the high debt burden, Sri Lanka must maintain a sustained annual growth rate of 5-6%. Additionally, they pointed out the crucial role of the private sector in leading export-oriented initiatives, which is vital for continuing low inflation and securing long-term economic prosperity.
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