2025 & Beyond - A contracted, deflationary economy with failed monetary policy. Clean Sri Lanka to rescue the economy or nobody's accountability?
Article's Purpose The purpose of this article is to highlight grave concerns over the monetary policy that has miserably failed to maintain the price stability in the year 2024 as set out in the statute and its likely contagion over the year 2025 and beyond. What is the price stability mandate? It is the maintenance of percentage increase of the quarterly average consumer price index within 3%-7% with a hypothetical middle target of 5% as set out in the monetary policy framework agreement reached between the Minister of Finance and Central Bank (CB) inconsistent with the current macroeconomic fundamentals of the economy. Why price stability has failed? The economy has confronted a four-month long deflationary trap with nine months violating the mandatory 3%-7% inflation target. The CB also predicts deflationary trend to be continued in 2025 and 2026 too. The manner in which inflation fast accelerated in 2022 and decelerated in return-post in 2023 and 2024 is self-explanatory for ...