Financial system stability improves

Ramani Kangaraarachchi

Supported by expansionary economic activities and supportive regulatory measures the financial system stability of the country improved last year. Central Bank Director K. D. Ranasinghe said at a public seminar at Rajagiriya Central Bank Training Centre last week.

Speaking on financial and monetary sectors he said that leading indicators relating to institutions, markets, payment systems and safety nets also improved last year. The Central Bank was also able to rehabilitate the six RFCs affected by the liquidity crisis prevailed at the end of 2008.Meanwhile, improvements to the payment and settlement systems continued in 2010. The expansion of the branch network of financial institutions continued. increasing 90 bank branches including 29 in the north and the east. Other banking outlets increased by 98 branches, 133 ATMs and 98 RFCs.

Elaborating on nine key macroeconomic challenges Ranasinghe said that maintaining and further strengthening the significant macroeconomic achievements realized in 2010 is one of the main challenges. Addressing possible labour market tightening, closing output gaps, continuing fiscal consolidation process, rising international commodity prices, further diversification of products and markets and effective use of existing bilateral trade agreements are also challenges.

The other challenges are improving doing business environment and attracting non-debt creating capital and transforming Sri Lanka into a strategically important economic centre. Finally, necessary reforms to the institutional framework of key public enterprises to operate them more efficiently and in a commercially sustainable way to reflect market conditions is another challenge, he said.