Sri Lanka will introduce new central bank legislation aimed at bolstering the bank’s independence, accountability and also price stability in the country via a new inflation target, its governor Nandalal Weerasinghe said on Thursday.
Sri Lanka is waiting for a $2.9 billion bailout programme from the International Monetary Fund (IMF) to be finalised on March 20, and establishing a fully independent central bank is one of the key criteria for receiving the aid package.
Economic mismanagement coupled with the impact of the COVID-19 pandemic left Sri Lanka severely short of dollars for essential imports at the start of last year, tipping the country into its worst financial crisis since independence from Britain in 1948.
The new legislation will prioritise controlling inflation and introduce an inflation target, Weerasinghe said, adding that the finance minister and the central bank would together agree on what that target should be. – Reuters