Former UNP Deputy Leader and MP Ravi Karunanayake has written to President Anura Kumara Dissanayake, urging a review of Sri Lanka’s monetary policy framework to strengthen long-term economic stability, protect the value of the rupee, safeguard household savings, and prevent future balance of payments crises.
In his letter, Karunanayake noted that the Monetary Policy Framework Agreement, which legally requires the Central Bank of Sri Lanka to maintain a medium-term core inflation target of 5 percent, was signed on October 5, 2023, by then Finance Minister Ranil Wickremesinghe and Central Bank Governor Dr. P. Nandalal Weerasinghe.
He pointed out that under the Central Bank of Sri Lanka Act No. 16 of 2023, the inflation target and related policy parameters must be reviewed every three years, with the first statutory review scheduled for October 2026.
Karunanayake proposed that preparations for this review should begin well in advance, given the country’s recent economic crisis and the importance of ensuring that the current inflation target remains suitable for Sri Lanka’s future development.
He further argued that while the 5 percent inflation target was appropriate during a period of severe economic reforms and uncertainty, it is now necessary to reassess whether it remains suitable for a country recovering from sovereign debt default, currency instability, balance of payments pressures, and a significant decline in domestic purchasing power.
