Colombo: The Central Bank of Sri Lanka (CBSL) said on Thursday that the island nation's economic recovery was being disrupted by an ongoing third wave of the Covid pandemic.
Sri Lanka will maintain its current policy corridor of 5.50 percent to inject overnight money while a worsening third Coronavirus wave will hurt economic output, requiring more fiscal and monetary stimulus’ the central bank said.
The CBSL statement said that impacts from the third wave are expected to be lower than during the first two waves due to selective restrictions and the country's ongoing vaccination program. Meanwhile, fiscal and monetary support for recovery will be maintained.
The CBSL said it would maintain its accommodative monetary policy amid this third wave of infections as inflation remains well anchored.
Sri Lanka is injecting overnight money into banks which are short at 5.50 percent and is also injecting permanent or longer term cash at a 5.18 percent ceiling rate set for Treasuries auctions, which is triggering a balance of payments troubles.
Accommodative monetary policy has been successful in increasing credit to the private sector during the first quarter of 2021, the CBSL said.
According to official figures, the total number of deaths recorded in Sri Lanka reached 1,051 since the pandemic broke out in the country in March 2020, while the total number of infections reached 151,343.
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