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    Central Bank Responses to Sunday Times Question

    August 27, 2014

    The Monetary Law Act sets out the main objectives of the Central Bank, which are the maintenance of economic and price stability and the maintenance of financial system stability. Maintaining financial system stability is a very important task because investments are made and maintained by persons and institutions only if the financial system is stable. In maintaining stability, confidence in the system is a major factor, and that is why the Central Bank focuses on maintaining confidence within the financial system and the economy. The reason that Sri Lanka has been able to benefit by massive investments, both local and foreign,

    in order to maintain an average economic growth of 7½ per annum for nearly 5 years, is the high level of confidence that investors have placed on Sri Lanka.


    For this purpose, the Central Bank regularly conducts Investor Updates in different parts of the world, participates at many seminars, workshops and symposia, publishes messages in the media, disseminates information via its website on a continuous basis, and provides up todate information about the Sri Lankan economy and other socio-economic developments in the country. By doing so, present and potential stakeholders of the Sri Lankan economy are provided the opportunity to make important decisions based on accurate information. While carrying out this endeavor, the Central Bank regularly faces many challenges due to various erroneous and mischievous statements that are also publicized by many persons, both local and international. As a result, the Central Bank also has to often provide responses in order to convey the correct picture about the country and the economy.


    Since the end of the conflict in May 2009, the Central Bank has observed with deep concern,that well-organized and well-funded sections by certain members of the Tamil Diaspora andthe local and international media, have been trying to convey inaccurate stories which are detrimental to Sri Lanka, which if allowed to continue unchecked and unchallenged, couldaffect the image of the country and the economy.


    Since the end of the conflict, many investments have flown into the country, based upon the benign conditions as well as robust economic growth that has been experienced since then.


    However, some of the Tamil Diaspora and the media yet continue their efforts to discourage foreign investments into Sri Lanka.


    It was in that context, that the Monetary Board decided to implement a comprehensive overseas campaign to provide an accurate account of the Sri Lankan political and economic environment to US leaders, think tanks, investors, business chambers and interested citizensto keep them abreast of the true situation in the country. In order to carry out such a campaign effectively and successfully in the USA, the normal practices in the USA have to be followed, based upon proper advice and effective interventions. The Sri Lankan economy has now grown in stature and character in the international sphere, with exports of around US$ 11 bn; imports of about US$ 18 bn; remittances of around US$ 7 bn; foreign investments in sovereign bonds and governments securities of over US$ 6 bn; foreign reserves at over US$ 9 bn; FDIs at around US$ 2 bn; and foreign stock market portfolio holdings at about US$ 8 bn.


    In that background, investing a modest sum to create awareness in the world's largest economy would undoubtedly benefit the Sri Lankan economy, and the Central Bank efforts have complemented and supported the activities of the Ministry of Foreign Affairs who have also been implementing many programmes in the face of the extra ordinary and vicious campaigns carried out by sections of the Tamil Diaspora in the USA.


    It may also be mentioned that similar awareness efforts are carried out by a large number of countries and global organizations in the USA, in order to apprise the US leaders and other influential agencies about various matters that those countries or organizations, wish to place before the aforementioned leaders and agencies.(KH)


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