Sri Lanka Says COVID-19 3rd Wave Disrupting Its Economic Recovery

The Central Bank of Sri Lanka (CBSL) on Thursday said that the country’s economic recovery was being disrupted by an ongoing third wave of COVID-19 infections.

“The Sri Lankan economy, which rebounded notably during the second half of 2020 and early 2021 as per available indicators, is experiencing renewed disruptions due to the emergence of the third wave of the COVID-19 pandemic and related preventive measures, including isolations,’’ the CBSL said in its monthly monetary policy review.

The CBSL statement said that impacts from the third wave are expected to be lower than during the first two waves due to selective restrictions and the country’s ongoing vaccination program.

Meanwhile, fiscal and monetary support for recovery will be maintained.

The central bank said it would maintain its accommodative monetary policy amid this third wave of infections as inflation remains well anchored.

The Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) will therefore remain at 4.50 percent and 5.50 percent respectively.

Accommodative monetary policy has been successful in increasing credit to the private sector during the first quarter of 2021, the CBSL said.