Reuters - Sri Lanka will introduce new central bank legislation with the intent of improving independence, accountability and price stability in the country, central bank governor Nandalal Weerasinghe said on Thursday.

Sri Lanka is waiting for a $2.9 billion bailout program from the International Monetary Fund (IMF) to be finalised on March 20 and establishing a fully-independent central bank was one of the key criteria for getting the aid package.

Economic mismanagement coupled with the impact of the COVID-19 pandemic left Sri Lanka severely short of dollars for essential imports at the start of last year, tipping the country into the worst financial crisis since independence from Britain in 1948.

The new legislation will prioritise controlling inflation, Weerasinghe said, adding that the finance minister and the central bank would reach agreement on what the inflation target should be.

A separate governing board, consisting of six members and the governor, will be formed in addition to the monetary board, he added.

The central bank will be required to issue an inflation report every six months and will need to provide an explanation to a parliamentary committee on its performance as and when necessary, Weerasinghe said.