News
What went wrong and how to correct them, according to CB Governor
By Shyam Nuwan Ganewatta and Shiran Ranasinghe
In 2020, the Central Bank made wrong decisions on the interest, and exchange rates, and these errors led to the current economic crisis, CBSL Governor Dr. Nandalal Weerasinghe, on Thursday, said.Addressing a lecture on the proposed Central Bank Act, he said that interest and exchange rates are excellent methods of keeping an unhealthy demand in check.
“You can’t have a stable economy by artificially controlling interest and exchange rates. We kept bank rates at five percent and everyone took loans. Now they can’t pay back the loans. We also kept the US dollar at 202 rupees and we ran out of reserves. Ultimately we had to declare bankruptcy,” he said.
Dr. Weerasinghe said that the state and state-owned enterprises are the biggest debtors in the country. There are more debtors than those with savings in the country, he added.
“There are a lot more people spending foreign currency than earning them. If we ask the people they might say we should keep the dollar at 203 rupees, but the Central Bank has to take unpopular, but right decisions,” he said.
Weerasinghe said the new legislation will prioritise controlling inflation and introduce an inflation target. The Finance Minister, and the Central Bank, would, together, decide what that target should be, he said.The CBSL Governor said the new Bill will establish two new mechanisms, instead of the monetary board that exists now.
Although the Secretary to the Treasury is now a member of the Monetary Board, he will not have such an influential position, with the new Act, he said. A separate governing board, consisting of six members, and the governor, will be formed, in addition to the Monetary Board, he added.
“The main point of this legislation is to empower the Central Bank to make the right decisions, not popular decisions,” Weerasinghe said.
“With this new law, a Central Bank governor can work independently and make decisions that cannot be changed, according to the whims of the government in power.”
The Governor added that with the new Act the Central Bank has to issue an inflation report, every six months, and will need to provide explanations to a parliamentary committee on its performance, as and when necessary, Weerasinghe said.
Latest News
IMF Executive Board approves US$206 Million in Emergency Financial Support for Sri Lanka
The IMF Executive Board approved emergency financing under the Rapid Financing Instrument (RFI), providing Sri Lanka with immediate access to SDR 150.5 million (about US$206 million,
equivalent to 26 percent of quota) to help Sri Lanka address the urgent needs arising from the catastrophic Cyclone Ditwah and preserve macroeconomic stability.
In response to severe weather impacts, the Sri Lanka Navy conducted a diving and technical assistance operation on Friday (19 Dec 25) to clear major debris obstructing vital infrastructure.
Heavy rainfall caused a significant rise in the water level of the Mahaweli River, washed large quantities of debris, including logs and bamboo, downstream. These remain lodged in the Diyakapanathota in Gatambe, Peradeniya and Lewella bridges, obstructing the smooth flow of water.
Acting promptly upon request, a Navy diving team executed a coordinated operation in collaboration with the Road Development Authority. The team removed the accumulated debris, restoring normal water flow through the bridges.
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Landslide early warnings issued to the districts of Badulla, Kandy, Kurunegala, Matale and Nuwara-Eliya extended till 8AM on Sunday (21)
The Landslide Early Warning Centre of the National Building Research Organization (NBRO) has extended the Landslide Early Warning issued to the districts of Badulla, Kandy, Kurunegala, Matale and Nuwara-Eliya till 08:00AM on Sunday (21st December 2025)
The LEVEL III RED landslide early warnings issued to the Divisional Secetaries Divisions and surrounding areas of Medadumbara, Doluwa, Ududumbara and Minipe in the Kandy district, and Nildandahinna, Hanguranketha, Mathurata and
Walapane have been extended.
LEVEL II AMBER landslide early warnings have also been issued to the Divisional Secetaries Divisions and surrounding areas of Soranathota, Hali_Ela, Passara, Meegahakivula, Badulla, Lunugala and Kandeketiya in the Badulla district, Thumpane, Harispattuwa, Udapalatha, Kundasale, Akurana, Poojapitiya, Udunuwara, Pathadumbara, Pasbage Korale, Gangawata Korale, Hatharaliyadda, Yatinuwara, Ganga Ihala Korale, Panvila, Pathahewaheta and Deltota in the Kandy district, Rideegama in the Kurunegala district, Ukuwela, Naula, Matale, Ambanganga Korale, Rattota, Pallepola, Wilgamuwa, Yatawatta and Laggala Pallegama in the Matale district, and Nuwara-Eliya in the Nuwara-Eliya district.
LEVEL I YELLOW landslide early warnings have been issued to the Divisional Secetaries Divisions and surrounding areas of Uva Paranagama, Welimada, Haputhale, Haldummulla, Ella and
Bandarawela in the Badulla district, Alawwa, Mallawapitiya,
Polgahawela and Mawathagama in the Kurunegala district, and Kothmale East, Ambagamuwa Korale, Kothmale West, Thalawakele and Norwood in the Nuwara-Eliya district.
IMF Executive Board approves US$206 Million in Emergency Financial Support for Sri Lanka
Navy clears major bridge obstructions in Peradeniya and Lewella
Landslide early warnings issued to the districts of Badulla, Kandy, Kurunegala, Matale and Nuwara-Eliya extended till 8AM on Sunday (21)
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