Nandalal Weerasinghe on Sri Lanka’s IMF programme, central bank reforms and road to recovery
CBSL chief returned from retirement to secure structural reforms, recapitalisation and financial resilience
Sri Lanka defaulted on $51 billion of debt in 2022, following the then-government’s focus on cutting taxes and increasing debt to fund large-scale projects. The Central Bank of Sri Lanka – despite advice from the International Monetary Fund – did not raise interest rates and instead provided monetary financing to fund the budget deficit. How did the CBSL get caught up in all this?
Monetary financing took place well before June 2022. It started soon after a new government [led by Gotabaya
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