Sri Lanka’s Central Bank Governor Dr. Nandalal Weerasinghe has said the country’s key economic objective is to maintain inflation without allowing it to rise above 5 percent, as the island nation seeks stability after years of crisis and shock. Speaking in Colombo, he noted that inflation is currently hovering close to 2 percent, giving policymakers room to carefully manage growth while avoiding renewed price pressures.
Addressing a conference on Economic Growth in the Age of Artificial Intelligence and Digitalization held yesterday, Dr. Weerasinghe said the economy continues to be managed with strong discipline despite disruptions caused by Cyclone Ditva. He stressed that sound financial management has allowed Sri Lanka to absorb external shocks without triggering fresh instability.
The governor highlighted a significant turnaround in the performance of state-owned banks, which once recorded a combined deficit of nearly one trillion rupees before the economic crisis. He said those institutions now hold a surplus of around one trillion rupees, reflecting improved income generation and tighter financial controls implemented over recent years.
According to Dr. Weerasinghe, this surplus has played a critical role in easing pressure on public finances. Amid debate over government spending, borrowing, and debt restructuring, he emphasized that the improved position of state banks has helped the government avoid additional borrowing at a time of economic vulnerability.
Commenting on the impact of Cyclone Ditva, the governor acknowledged that the storm caused notable damage to property but said the overall economic cost appears lower than initially feared. He recalled that earlier estimates, including figures cited from a World Bank report, placed potential losses at around US$4.1 billion. However, more detailed assessments now suggest reconstruction costs will be less than expected.
While the cyclone may temporarily affect growth figures, Dr. Weerasinghe said updated data would be released soon. He expressed confidence that Sri Lanka is on track to achieve an economic growth rate of 5 percent from next year, signaling cautious optimism that the country’s recovery is gaining momentum under disciplined fiscal and monetary management.
