Following an 81% depreciation against the US Dollar in 2022, the Sri Lankan Rupee (LKR) has appreciated by 11% from January to August 2023…reports Asian Lite News
Sri Lanka’s economy is displaying signs of stability and a positive trajectory, as highlighted by World Bank Economist Richard Walker during his recent address in Colombo. The country’s economy is projected to achieve a growth rate of 1.7% in 2024, rebounding from a contraction of 3.8% in 2023.
Walker noted a significant decline in inflation, which had previously reached approximately 70%, now reduced to single-digit levels after about 19 months. Furthermore, interest rates have also seen a decrease. The bolstering of foreign reserves is expected through increased tourism, remittances, and inflows from development partners, Daily News reported.
“This has contributed to the accumulation of usable official reserves, with a substantial increase observed due to foreign exchange inflows, thereby positively impacting the balance of payments in the first half of this year,” explained Walker. Following an 81% depreciation against the US Dollar in 2022, the Sri Lankan Rupee (LKR) has appreciated by 11% from January to August 2023.
Meanwhile, the World Bank Group said it has approved $700 million in financing for two operations to help Sri Lanka implement foundational reforms as the island nation is trying to overcome its worst-ever economic crisis.
The World Bank Group’s Board of Executive Directors discussed the new Country Partnership Framework (CPF) for Sri Lanka, which aims to help restore economic and financial sector stability and build a strong foundation for a green, resilient, and inclusive recovery, reports Xinhua news agency quoting an official statement issued by the global lender.
The CPF, which covers the years from 2024 to 2027, lays out a two-phased approach that starts with a focus on urgent macro-fiscal and structural reforms and supports protecting the human capital and the most vulnerable population.
The statement said it comes at a time when the country is navigating its worst-ever economic crisis that has had devastating impacts on people’s lives and demands deep reforms to stabilise the economy and protect the poor and vulnerable.