Colombo (PTI): A political crisis in Sri Lanka last year led to the slowest economic expansion in 17 years, the central bank said Friday.
Growth for 2018 was cut from a forecast above 5.0 per cent to about 3.0 per cent because of damage to the economy from a conflict between the president and prime minister, Central Bank of Sri Lanka governor Indrajith Coomaraswamy said.
President Maithripala Sirisena sacked Prime Minister Ranil Wickremesinghe in October and dissolved parliament even though he did not have a majority to back the move. The showdown was only ended by the Supreme Court in December when it held that Sirisena’s actions were unconstitutional and illegal.
The bank governor said he expected better growth in 2019 as the outflow of foreign capital had reversed.
“All in all, we are in a better place this year,” he said, warning however that there could be fiscal slippage because the government was likely to offer sweeteners to the people during a presidential election this year.
Coomaraswamy noted that Sri Lanka’s Supreme Court had demonstrated its independence underscoring that key institutions functioned despite the crisis.
“Our systems stood up very well in the last few months,” Coomaraswamy told reporters. “But businessmen have concerns about political stability.”