Statement by the Hon. Mahinda Rajapaksa - WBG Governor's Statement No. 14 - October 15, 2020

Jul 19, 2026

Provides an official governor statement by Mahinda Rajapaksa, addressing Sri Lanka’s economic response to the COVID-19 shock during 2020. It describes global recession conditions, emergency macroeconomic support, and the importance of fiscal leadership in the absence of a durable solution. It then outlines Sri Lanka’s containment and health-sector capacity build-up, election context, Central Bank relief measures, monetary easing, liquidity injection, and the recovery of exports alongside major disruptions to tourism and external sector stability.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages5

Reading Time13 min

AccessFree to download

WBG Governor's Statement No. 14

2020 context: COVID-19 and global economy

Sri Lanka: elections, lockdown measures, and recovery

Sri Lankan economy: health support and Central Bank relief measures

Trade, tourism impact, and external sector stabilization

Public Disclosure Authorized Public Disclosure Authorized WBG Governor's Statement No. 14 October 15, 2020 Statement by the Hon. MAHINDA RAJAPAKSA, Governor of the Bank for SRI LANKA Statement by the Hon. Mahinda Rajapaksa, Governor of the Bank for Sri Lanka Mr. Chairman, The year 2020 has been unprecedented. COVID-19 has rapidly spread wreaking havoc in economies all over the world. The health pandemic has ground to a halt the global economy and necessitated the adoption of extreme measures within national borders to contain the crisis. The Sri Lankan economy has also been hard hit by the COVID-19 pandemic. We have taken firm action, including aggressive contact tracing, quarantining and lockdown measures, to deal with the crisis. When compared to many countries in the world, Sri Lanka has fared remarkably well in managing the COVID-19 outbreak. While the death rate and the number of infected persons has remained low and community transmission averted to a great extent, isolated outbreaks are being proactively handled to curb any rapid spread of the virus. While, stringent domestic containment measures and negative spillovers from the global economic shutdown have severely affected economic activity, recent indicators show signs of a recovery. World Economy The global economy continues to be in recession as the pandemic spreads with second waves of infection in many countries. While the economic outlook remains uncertain, somewhat improved developments in the second and third quarters point to a less dire contraction for global growth in 2020 than earlier predicted. Governments the world over have taken unparalleled measures to support their economies through macroeconomic policies. While central banks have resorted to accommodative monetary policy and liquidity injections to jumpstart economic activity, massive fiscal responses have catered to the health needs of the pandemic while protecting the vulnerable in terms of both households and firms. In the absence of a durable solution to the crisis, fiscal policy will have to lead from the front to not only to provide the necessary support but also to facilitate the envisaged recovery. Countries will witness differentiated outcomes in growth affected by factors such as the size of the tourism sector, effectiveness of measures to contain the pandemic and gaps in response capacity. Medium term growth will be lower for all countries when compared to the pre-COVID situation. In my own country, in August 2020, the General Elections were conducted in a free and fair manner adhering to strict health guidelines on COVID-19. The General Elections resulted in a new government being elected to office with almost a two third majority which has had a positive impact on business confidence in the country. Mr. Chairman, it is in this background, that I will briefly highlight the economic developments in Sri Lanka. Sri Lankan Economy While the country imposed strict lockdown measures during the latter part of March 2020, such measures were carefully crafted to mitigate the impediments to the smooth functioning of the economy and the society. The government swiftly channeled resources to augment the capacities in the health sector to meet the challenges of the COVID-19 virus and also provided support to the vulnerable in society including through cash transfers to households. The government and the Central Bank coordinated to help revive economic activity, with the Central Bank introducing relief measures for businesses and individuals affected by the pandemic by funding working capital concessional loan schemes and imposed maximum interest rates on credit cards, pawning advances and pre-arranged overdraft facilities. This facilitated the recovery of activities by mid May 2020 whereby exports have picked up considerably in the months following to date. The accommodative monetary policy stance adopted by the Central Bank in 2020 to weather the adverse effects of the COV

FAQs

What economic impacts did COVID-19 have in 2020 according to the statement?

COVID-19 rapidly spread worldwide, driving global recession and forcing countries to implement extreme measures. In Sri Lanka, strict containment affected economic activity while health and support measures were expanded.

What actions did Sri Lanka take to respond to the pandemic?

The statement highlights lockdown and contact-tracing measures, increased resources for the health sector, support for vulnerable households via cash transfers, and coordinated relief from the Central Bank for businesses and individuals.

How did Sri Lanka’s economic activity and external sector evolve during 2020?

Despite severe disruptions early in the year, exports later recovered toward pre-COVID levels by July 2020. Tourism earnings were hit particularly hard due to travel restrictions and the closure of Bandaranaike International Airport, prompting measures to stabilize the external sector.

Jul 19, 2026

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