Sri Lanka will have to go for another DDO strategy if targets of current plan not achieved – CBSL Governor

Nandalal Weerasinghe - Central Bank Governor of Sri Lanka

Dr. Nandalal Weerasinghe. (Photo: CBSL)

Sri Lanka’s Central Bank Governor says Sri Lanka will have to go through another Domestic Debt Optimization (DDO) strategy if the targets of the current plan are not achieved.

Dr. Nandalal Weerasinghe also noted that the DDO strategy announced by the government is strong enough to restore the country’s debt sustainability.

He shared his views while presenting the keynote at the CEO forum on Friday (July 21) in Colombo, organised by the Sri Lanka Chapter of Chartered Financial Analysts (CFA).

Addressing concerns about a second DDO strategy, the central bank governor said if the country deviates from the current path, there could be another domestic debt optimization as well as another default and bankruptcy.

“We don’t need another DDO because this DDO is quite strong enough and consistent with the targets to restore debt sustainability,” he said, adding that the fiscal policy, structural reforms and the growth path should move in conjunction with the domestic debt optimization plan.

Dr. Weerasinghe said the Sri Lankan economy has the potential to overperform with growth levels of 4% – 5%, adding that it would help restore the country’s debt sustainability in five  years without waiting until 2032.

The central bank governor is also confident that Sri Lanka will see single-digit inflation by the end of this month.