A country’s economy depends on its money supply and with banks being at the centre of financial stability, the sector is a key contributor to economic growth.

According to President’s Counsel and Chairman of the Bank of Ceylon Ronald C. Perera, Sri Lanka’s banking sector “has been playing a key role across all sectors of the economy” throughout the economic crisis and contraction.

He remains positive on the country’s road to recovery. “We think we’ve emerged from the really dark area and find that there are so many positive things despite the negatives still being there,” he asserted, in a recent LMDtv interview.

Perera’s rosy outlook prevails in relation to Sri Lanka’s foreign exchange crisis as well: “Most of the foreign exchange concerns have been sorted out. We have seen excess forex supply in the market and that is the main reason for the Sri Lankan Rupee appreciating against foreign currencies.”

In his view, the situation will continue to improve following the opening of the economy to increase imports as well as the debt restructuring process that has yet to be completed.

Perera also mentioned the positive results of the government’s initiatives to increase tourist arrivals and worker remittances, which have contributed to Sri Lanka’s favourable forex situation.

“I believe that we’re in a recovery phase; and with careful action and proactive strategies, we will be able to manage forex for the country’s essential items,” he averred.

As for his predictions for interest rates for the remainder of the year, Bank of Ceylon’s chairman explained that the last few months have led him to believe that interest rates will come down further.

He noted: “Once interest rates drop, I expect the corporate sector to begin borrowing more for their projects, which will have a cascading effect on employment and consumption.”

“At the moment, we find there are many sectors not being particularly active; but once interest rates reduce, we will see the economy as a whole picking up,” he elaborated.

Perera nevertheless advised banks to be wary in view of the circumstances: “We are coming out of this dark period and seeing the light at the end of the tunnel. So we must be cautious – because we have to manage our liquidity and funds. It’s a fine balancing act that we need to engage in.”

He delved into the cruciality for banks to provide development funds to SMEs “since they not only contribute to developing the economy through their manufacturing processes but also by expanding employment.”

“Financial services and banks are essential to the growth of any sector. Therefore, the banking sector should ensure that financial services for the private sector are widened, broad-based and tailor-made,” he said, adding that this will help the private sector “operate at high levels of efficiency.”

“Having access to finance can contribute to the growth process by promoting private sector entrepreneurship, motivation and the adoption of advanced technology,” he observed.

Perera commended LMD’s Refresh Sri Lanka campaign to promote civic-mindedness, calling it a “timely initiative.”

He noted: “Sustainable growth is a collaborative effort of all participants in industry. The banking sector ensures that it maintains sustainable growth. Going beyond normal industry practices, it is involved in investing responsibly in renewable energy projects, environmental preservation and uplifting the livelihood of the people of Sri Lanka.”

He stated: “We expect people to be civic-minded and get together to build the country as a whole, forgetting all narrow prejudices.”

“If all of us – including the government, regulator and business community, as well as the general public – work together as a nation, we will undoubtedly be able to revive the economy, develop the country and reap the benefits,” Perera said.

And he affirmed that “it’s going to be a tough journey but we have to do it – we have no other way.”