Sri Lanka in “much better position” to handle oil price shocks – CBSL Governor

The Governor of the Central Bank of Sri Lanka, Dr. Nandalal Weerasinghe has assured the public that Sri Lanka is now in a “much better position” to withstand global economic shocks, including rising oil prices and geopolitical tensions in the Middle East.

Speaking in an interview with Bloomberg recently, the Governor highlighted that the nation has built significant financial buffers, including foreign reserves that have surged from near-zero levels to over $7 billion. 

This provides a critical safety net against the rising oil prices and supply chain disruptions currently triggered by Middle East tensions.

The Governor emphasized that the domestic inflation environment has transformed, dropping from a crisis peak of 70% to a current rate of 1.6%. 

This low inflation gives the Central Bank “significant space” to absorb external price shocks without destabilizing the local economy. 

Unlike the previous crisis, where fuel shortages were caused by a total lack of foreign exchange, Dr. Weerasinghe clarified that any current risks are related to global supply logistics rather than a lack of domestic funding. 

He noted that the exchange rate will be allowed to act as a shock absorber to manage demand and protect the country’s fiscal health.