“The six-month roadmap for securing the stability of the macroeconomic and financial system” presented yesterday will provide immediate solutions to some of the current burning issues, said Central Bank of Sri Lanka (CBSL) Governor Ajith Nivard Cabraal.
He said that first of all, the CBSL will remove the 100% cash deposit margin requirement on 600 items previously imposed on the import of non-essential goods. “We found that this decision was causing problems for many sectors and we have now overturned it. However, we urge importers not to import excess stocks and to import only what is necessary, ”the governor said.
He said plans would be in place to gradually lift the moratoriums and develop long-term plans to support businesses affected by the lockdown linked to the pandemic. Steps will be taken to stop parate executions and vehicle repossessions over the next six months for borrowers affected by the pandemic.
The Central Bank plans to provide liquidity support of up to Rs. 15,000 million to finance accrued interest on loans that have been granted under the moratorium, so that financial institutions (FIs) can cope with the effect. of the moratorium in a sustainable manner. “There will also be a waiver of all penalties imposed by FIs during the moratorium period. “
The governor also defined a 20-point “to-do list” that includes several short-term measures to ease the burden on public, financial institutions, SMEs and other sectors. “No changes will be made to Personal Foreign Currency Accounts (PFCA), previously known as NRFC / RFC accounts,” he said.
The immediate facilitation of education and health-related foreign currency outflows and the lifting of the ceiling on outward investment and migration allocations in January 2022 were two other key points on the 20-point “to-do list”.
He said the six-month roadmap is set to bring immediate solutions to critical issues and a one-year border roadmap would follow, leading the country to more stability.
The governor reiterated once again that there is no need to fear an oil shortage and that the CBSL will assume responsibility for its financing. The governor said they hope to maintain an economic growth rate of 5% despite investing more than US $ 200 billion for spending related to COVID-19 and hope to increase this rate to 6.5% in the first quarter of 2021 .
Commenting on international ratings, he said that since the pandemic, 123 countries have been degraded. “On foreign exchange reserves too, the rating agencies painted a negative picture of Sri Lanka and did not take into account the large number of inflows arriving in Sri Lanka to increase reserves.”
Some of the key points on the to-do list are: maintaining mid-single-digit inflation; Ensure the stability of interest rates and the exchange rate; Continue measures aimed at combating banned pyramid schemes and other financial scams; Strengthen the balance sheet of the Central Bank with progressive dismantling measures and the constitution of external reserves; Provide guidance on the IT risk resilience of approved banks; Strengthen off-site oversight and improve the risk management framework, including governance in FIs; Increase the frequency and methods of public awareness; Launch a green financing facility; Strengthen regional development initiatives; Develop new regulations on the protection of financial consumers under the Monetary Law Act; Introduce a user-friendly online complaint submission portal via CBSL website and social media; Establish “Credit Advice Centers” and “Investment Advice Centers” in regional offices; Facilitate the establishment of “Equity Funds” to support companies in difficulty and thus avoid the increase in NPLs; Remove cash margin deposit requirements on “non-essential / non-urgent imports” with immediate effect; Consider the possibility of repurchasing the entire issuance of International Sovereign Bonds (ISBs) maturing in January 2022 and / or July 2022, if high haircuts prevail in the market.