The central bank of Sri Lanka has made a surprising move by cutting interest rates for the first time in three years, indicating confidence that the country’s financial crisis is improving. The COVID-19 pandemic, combined with economic mismanagement, left Sri Lanka with a severe shortage of dollars for essential imports at the beginning of last year, leading to the worst financial crisis the country has experienced in 70 years. The crisis resulted in severe shortages of food, medicine, and fuel, which led to street protests and the resignation of then-President Gotabaya Rajapaksa. A new government took over in July and secured a $2.9bn bailout from the International Monetary Fund (IMF) in March, the 17th IMF bailout for Sri Lanka and the third since the end of the country’s civil war in 2009.
Inflation, which reached a record high of approximately 70% in September, is decreasing, government revenues are improving, and pressure on the country’s balance of payments is easing. The government aims to finalize negotiations to restructure its bilateral debt with other countries by September.
Source from www.aljazeera.com
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