CBSL views JPMorgan statement as positive reinforcement

By Imsha Iqbal 

Central Bank of Sri Lanka (CBSL) Governor Dr. Nandalal Weerasinghe admitted yesterday (19) that the backing by the US investment bank, JPMorgan, on Sri Lankan bonds is a positive reinforcement to the country.

“The JPMorgan statement is a very positive statement, as well as realistic,” stated the Governor.

Dr. Weerasinghe stated this at the press conference that was held at the CBSL auditorium following the presentation of the Monetary Policy Review No. 04 of 2022. It was in response to an inquiry made by a journalist on the JPMorgan recommendation on buying bonds to pave the way for the country to consider commercial borrowings again.

Dr. Weerasinghe elaborated that from the perspective of a foreign investor looking at Sri Lanka to invest at this point, if they believe that the programme the Central Bank is engaging in (in terms of debt restructuring and International Monetary Fund [IMF]) will be successful, then hopefully they will decide that this is the best time to invest in Sri Lanka.

He noted that if the investors bring dollars, Sri Lanka has very attractive interest rates that can be offered, as well as an attractive exchange rate. 

“The rate of return one can get if they (investors) come now, in my (the Governor of the CBSL) view, is at its best opportunity,” he added.

However, while saying that there was no point in the Governor of the CBSL himself saying such, Dr. Weerasinghe expressed his pleasure that an international independent investment agency had expressed the view, which is a “good signal” for anyone interested in investing in Sri Lanka, as JPMorgan seems to believe that Sri Lanka is moving in the right direction.       

Further elaborating the improvement that the country has made in terms of its policy measures, Dr. Weerasinghe said: “We see that imports are coming down. We see the credit growth also coming down. We see the monetary policy tightening and the exchange rate depreciation transmitting into the economy to curtail the demand component. Obviously, the cost push side and supply side issues that we have to admit separately.” 

At the same time, he said that the CBSL does not see why they should not raise interest rates with headline inflation saying that he is glad that the market is responding to the policy measures that are in place. 

The JPMorgan statement on Wednesday (18) read: “We think this stability should result in both IMF discussions and the process of appointing legal and financial advisors moving forward.”