Former United National Party (UNP) Deputy Leader and MP Ravi Karunanayake has claimed that conflicting policies and actions between the Ministry of Finance and the Central Bank are seriously affecting Sri Lanka’s economic development.
Speaking in an interview with Ceylon Wire, Karunanayake said the lack of proper coordination between the two institutions has become a serious issue.
He said that if a government elected by the people wants to steer the financial sector in a particular direction, it must have the necessary capacity to do so.
Karunanayake argued that while the Central Bank has an independent mandate to control inflation, an excessive focus on inflation control without sufficient attention to economic development could create challenges.
He said that if interest rates are not reduced and inflation control remains the sole focus, depreciation of the Rupee against the US Dollar could further increase inflation and make it difficult to manage.
He added that such conditions could ultimately hinder the country’s economic development.
Karunanayake also said the large number of laws currently in place has limited the ability of government officials to exercise their discretion, resulting in officials carrying out their duties with a sense of fear.
