At the 14th South Asia Economic Summit, P Nandalal Weerasinghe, Governor of the Central Bank of Sri Lanka, highlighted the crucial role of regional cooperation in fortifying economic stability within South Asia.
Acknowledging the substantial support provided by Saarc countries, particularly Bangladesh and India, Governor Weerasinghe emphasized the profound impact of this collaboration on Sri Lanka’s macroeconomic landscape. He commended the assistance extended during times of crisis, which significantly alleviated the socio-economic challenges Sri Lanka faced, leading to profound relief within the nation.
“The support received from neighboring countries has not only provided short-term relief but also has the potential for long-term benefits, including investment flows to bridge infrastructure gaps and enhance overall productive capacities,” stated Governor Weerasinghe during his address at the summit.
Highlighting recent successful financial transactions, he pointed out that Sri Lanka’s repayment of a $200 million loan from Bangladesh, concluding with a $50 million payment, signifies the nation’s progress in recovering from a previous economic crisis.
Governor Weerasinghe underlined the challenges faced by the global economy, particularly exacerbated by the COVID-19 pandemic. Despite the adjustments to the ‘new normal,’ emerging geopolitical tensions have perpetuated fluctuations in commodity prices, potentially impacting global output growth. He expressed optimism about the resilience displayed by the South Asian region, largely attributed to exports and sustained remittance flows.
However, he cautioned about the challenges in achieving pre-pandemic growth levels in the region due to the gradual withdrawal of the expansive monetary and fiscal support necessitated by the pandemic.
“While individual economies show promise, there’s a collective need for regional synergy to expedite our path to achieving ‘high-income’ status within a generation,” he remarked. Governor Weerasinghe stressed the urgency for policymakers to collaborate, finding common ground to pave the way for prosperous economies and societies.
Governor Weerasinghe urged a reevaluation of strategies within the Saarc bloc, emphasizing the importance of effective, practical measures to navigate the current economic slowdown and promote regional trade among Saarc nations. Intra-regional trade, currently at $40 billion in 2022, presents substantial potential for growth despite historical limitations caused by various trade barriers.
Highlighting the significance of regional agreements such as BIMSTEC, IORA, and the ongoing negotiations on SATIS, Governor Weerasinghe stressed the importance of these initiatives to foster trade in the services sector and improve economic partnerships in the region.
The Sri Lankan Central Bank Governor concluded by noting the encouraging initiative by India to facilitate trade in Indian rupees, further enhancing regional economic cooperation.