Sri Lanka will keep lending rates below 10% to help revive economy

COLOMBO: Sri Lanka on Monday ordered tight foreign exchange controls after announcing a 3.9 percent contraction in the economy that accentuated concerns over its ability to repay foreign debt, according to AFP.

Central Bank Governor W.D. Lakshman said the coronavirus pandemic caused a record fall in the tourism and trade-dependent economy last year as he announced the figure.

According to AFP, he said the central bank will keep lending rates below 10 percent to help revive the battered economy but there will be tighter controls on imports.

A ban on non-essential imports, including all types of vehicles, imposed in March has already been extended through 2021 and Lakshman suggested there could be more controls.

“For the sustainability of the low interest rate structure, it is essential that foreign exchange leakages for non-essential imports and outward investment are minimized,” he said in the AFP report.