NE development a priority this year - Cabraal

By Lalin FERNANDOPULLE

Rapid economic development of the Northern and Eastern provinces will be a priority this year, said Governor of the Central Bank of Sri Lanka, Ajith Nivard Cabraal.

He was speaking at a ceremony on Friday to launch the Central Bank’s ‘Road Map: Monetary and Financial Sector Policies for 2009 and Beyond’. He said the Poverty Alleviation Micro Finance Project (PAMP) phase II, a poverty alleviation micro finance scheme operated in the post conflict areas and the adjoining districts was expected to be operational in the Northern and Eastern provinces during 2009. “With the launch of the Prosperity Index, the Central Bank was more aware of the actual development needs of the country. This has undoubtedly streamlined our efforts in taking Sri Lanka towards prosperity”, Cabraal said.

The new year will be a challenging year for the financial sector. The global financial downturn which had caused bank failures and a liquidity crunch globally highlighting the significance of risk management and good governance in banks. “The prudent regulations adopted by the Central Bank have helped the financial institutions to face the crisis. The Central Bank will continue to be vigilant and work in collaboration with banks and financial institutions to ensure financial stability and prudent management of financial institutions”, the Governor said. “Inflation has been moderating since July 2008 and in line with such deceleration inflation expectations are showing signs of moderation. The declining trend in inflation is expected to continue in the period ahead with a single digit level by the middle of this year”, he said.

According to the Central Bank inflation would reach around 8-9 percent by mid 2009 and will continue to remain moderate. Interest rates were thereby expected to follow the declining trend in inflation in 2009.

Cabraal said despite global and internal challenges the economy maintained a growth rate of 6 per cent for the third consecutive year.