Senior Sri Lankan central bankers have been meeting with the country's senior financiers in a bid to explain the rationale behind several moves made by the Central Bank, including the imposition of a 50 per cent margin on some letter of credit (L/C) transactions.

The central bankers say that recent monetary policy measures have been taken to stabilise the economy and reinforcethe Central Bank's resolve to fight inflation.

Sustained growth

Governor Nivard Cabraal said the measures taken to contain credit growth were aimed at curbing inflationary pressures with a view to achieving sustainable growth in the longer term.

"You should not think that we are putting a dampener on your activities," Cabraal told the senior financiers. "We want to sustain the high growth path we have achieved by having stable conditions to sustain growth over a longer period," he said.

The Central Bank has come under fire from critics for printing money, stoking inflation and undermining the national currency.

L/C moves

Assistant Governor H N Thenuwara said the recent 50 per cent margin on L/Cs on so-called 'non-essential imports' was temporary and was aimed at containing credit growth.

Critics, however, say the moves may send wrong signals to the market, with market participants interpreting them as last ditch measures to curb imports.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.