Sri Lanka’s economic growth was around 3 percent in 2018, the lowest since 2001, Central Bank Governor Indrajit Coomaraswamy said on Friday.

“The 2018 economic growth was around 3 percent, well below the potential growth of 5 percent,” Coomaraswamy told reporters at a post monetary policy rate review briefing in Colombo.

Earlier on Friday, the central bank reduced commercial banks’ statutory reserve ratio (SRR) by 100 basis points in a surprise move to increase liquidity and boost credit growth as policymakers struggle to support the economy following a political crisis and a recent rate increase.

The SRR cut would inject 60 billion rupees (334.45 million) into the financial system, the central bank said.

“The (Monetary) Board was of the view that some policy intervention by the Central Bank to address the large and persistent liquidity deficit in the domestic money market is warranted,” the central bank said in a statement.

The rupee has rebounded 1.8 percent against the dollar since hitting an all-time low of 183.00 on Jan. 3, while foreigners have resumed buying government bonds.

Coomaraswamy also said the central bank “is doing the paper work” on a yuan swap agreement with the People’s Bank of China equivalent to $1.5 billion, along with a $400 million swap from Reserve Bank of India and another from Qatar as Sri Lanka struggles to repay a record $5.9 billion foreign loan due this year.

Source: REUTERS

-Agencies