Former United National Party (UNP) Deputy Leader and Member of Parliament Ravi Karunanayake says raising interest rates alone cannot resolve Sri Lanka’s underlying economic challenges, warning that such an approach is insufficient to strengthen the country’s external finances or stimulate economic growth.
In a letter addressed to President Anura Kumara Dissanayake, the MP outlined his views on the current economic situation and proposed measures to address the country’s long-term challenges.
Karunanayake questioned whether Sri Lanka’s inflation has primarily been driven by excessive domestic demand, arguing that inflation over the past decade has largely resulted from supply-side and import-related factors.
He identified the depreciation of the Sri Lankan rupee, rising fuel and energy import costs, disruptions to food supply chains, increases in electricity and water tariffs, higher taxation, fluctuations in global commodity prices, and limited access to external financing as the principal drivers of inflation.
Accordingly, the MP argued that relying solely on interest rate adjustments without addressing these structural issues would not provide a sustainable solution to inflation.
While emphasizing that inflation control remains an essential component of economic management, Karunanayake said monetary policy should form part of a broader economic strategy focused on strengthening the country’s productive capacity and external stability.
He further argued that increasing interest rates alone cannot build foreign exchange reserves, increase export earnings, reduce global oil prices, or improve national productivity.
The former minister stressed that sustainable economic recovery requires a comprehensive policy approach that addresses the root causes of inflation while promoting investment, exports, and long-term economic growth.
