Sri Lanka's economic growth is expected to 'strongly rebound' in 2021 with a growth of around 5%- 6%, Central Bank Governor Deshamanya Prof. W.D. Lakshman said.

"The Government and the Central Bank are also continuing discussions with bilateral and multilateral partners, internationally and locally, and we are confident the Sri Lankan economy will continue to display its resilience despite unfounded sovereign rating downgrades that the country experienced in 2020. Reflecting the pandemic driven contraction in 2020 we expect the Sri Lankan economy to 'strongly rebound' in 2021 with a growth of around 5%- 6%," Prof. Lakshman said whilst addressing the first Monetary Policy review online press conference for the year 2021.

"The turnaround in Sri Lanka sovereign bond yields as well as the notable upturn in the stock market indices displays the confidence that the global and domestic investors have placed on the Sri Lankan economy and its prospects. We expect the Sri Lankan economy, particularly the production side, to respond favourably to the fiscal and monetary stimuli in place and also to the novel working environments created by the pandemic. The improvements on the domestic front will help the country to stand on its own and also address the stability concerns that have been highlighted from time to time in a substantial manner," he added.

Speaking Further, Prof. Lakshman said that the Monetary Board considers the current monetary policy environment to be appropriate.

"Lending rates have declined sharply in 2020 and we expect a further reduction in market lending rates with the high level of excess liquidity that is being maintained in the domestic money market. We have seen an acceleration in private sector credit growth in response to the improving business environment and low interest rates."

"The external sector of the economy has recorded notable developments during the year. Workers' remittances has surpassed the US $ 7 billion exceeding expectations. In spite of meeting the government’s foreign debt service obligations of US $ 4.5 billion, official reserves have been maintained at US $ 5.7 billion by the end of 2020," Prof. Lakshman said.

"With the COVID pandemic tourism inflows and financial inflows were severely affected during the period of 2020 and we expect these inflows to recover with effect from 2021," he added.

The Monetary Board of the Central Bank of Sri Lanka, at its meeting held yesterday(18), decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank at their current levels of 4.50% and 5.50%, respectively.