World Bank Managing Director Ngozi Okonjo-Iweala has said that the Mahinda Chinthana is behind the success story of Sri Lanka’s economy.
It was the World Bank Managing Director who delivered the commemorative lecture today to mark the Diamond Jubilee of the Central Bank of Sri Lanka. The flexibility of the Monetary Sector and the Mahinda Chinthana which introduce several positive future measures earned her praise.
She said Sri Lanka has handled the international financial crisis quite well. Real GDP growth showed from six percent in 2008 to 3.5 percent in 2009, but with prudent policy responses of a small fiscal stimulus package and the policy of gradually loosening monetary conditions, the economy has rebounded well. Financial support from the IMF and the post conflict bounce also helped to reduce the crisis effects, as remittances and other capital flowed into the country. The Sri Lanka stock exchange has been one of the best performing in the world so far in 2010. But she said it no time to relax. Macroeconomic policy has to continue to work to consolidate post crisis and post conflict gains and be ready to respond to the risk of a renewed round of global volatility.
The World Bank Managing Director said that inflation has come down to the 6-7 percent level this year, the recent uptick due to rising international commodity prices notwithstanding. This she emphasized is an important development and the challenge now is to lock in inflation expectations at roughly this level and permanently break from the past of double digit inflation. She added that fiscal and monetary policy coordination will be key in this regard because credibility will not be easily gained as experience from many other countries shows.