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Purchasing Managers’ Indices indicate improvements in Manufacturing and Services activities in February 2024

Sri Lanka Purchasing Managers’ Index for Manufacturing (PMI – Manufacturing) recorded an index value of 56.0 in February 2024, indicating a continued expansion in manufacturing activities. This improvement was attributable to the increases observed in all sub-indices.

The expansion in New Orders and Production was mainly driven by the manufacture of food & beverages sector. Many respondents mentioned that they are preparing for the upcoming festive demand. However, New Orders and Production in the manufacture of textiles & apparel sector decreased on a month-on-month basis. Meanwhile, Employment and Stock of Purchases expanded during the month in line with the New Orders and Production. Further, Suppliers' Delivery Time continued to lengthen in February, on par with the expansion in manufacturing activities and prolonged shipping disruptions caused by the Red Sea crisis.

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Publication of the Macroprudential Policy Framework

As per the section 63(2) of the Central Bank of Sri Lanka Act, the Central Bank has published the Macroprudential Policy Framework. This publication aims to create awareness among relevant stakeholders about the macroprudential policy making process as well as the role of macroprudential policy in the financial system.

This document explains the objectives and purpose of macroprudential policies; systemic risk surveillance and indicators; macroprudential tools; interactions with other policies of the Central Bank; institutional set-up; and communication of macroprudential stance/systemic risk developments by the Central Bank. This publication will be a useful and reliable source of reference for those who are interested in the macroprudential approach of the Central Bank as the macroprudential authority of Sri Lanka.

The current version of the Macroprudential Policy Framework is available in electronic form and can be accessed through the Central Bank website: 

External Sector Performance - January 2024

The merchandise trade deficit recorded an expansion in January 2024, mainly due to higher import expenditure.

With regard to services trade, notable inflows were observed in January 2024 into sea transport, air transport, and computer and IT/BPO related services compared to January 2023. Meanwhile, major outflows were recorded in the form of air transport, sea transport, and management and consulting services.

Workers’ remittances recorded an improvement in January 2024, compared to the corresponding period of the previous year.

Earnings from tourism recorded the highest monthly value in January 2024 since January 2020.

Foreign investments in the government securities market recorded a net outflow in January 2024.

Gross Official Reserves continued to improve to US dollars 4.5 billion by end January 2024 and the Sri Lanka rupee recorded an appreciation of 4.4 per cent during the year up to 29 February 2024.

CCPI based headline inflation decelerated in February 2024

Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2021=100) decelerated to 5.9% in February 2024 from 6.4% in January 2024. This deceleration in the headline inflation is broadly in line with the projections of the Central Bank of Sri Lanka (CBSL).

Food inflation (Y-o-Y) accelerated to 3.5% in February 2024 from 3.3% in January 2024, whereas Non-Food inflation (Y-o-Y) decelerated to 7.0% in February 2024 from 7.9% in January 2024. Monthly change of CCPI recorded -0.05% in February 2024 due to the combined effect of price decreases of 0.67% observed in the items of Food category and price increases of 0.62% observed in the items of Non-Food category. Meanwhile, core inflation (Y-o-Y), which reflects the underlying inflation trends in the economy, accelerated to 2.8% in February 2024 from 2.2% in January 2024.

SL Purchasing Managers’ Index (PMI) for Construction Industry – January 2024

Sri Lanka Purchasing Managers’ Index for Construction (PMI – Construction) indicates an expansion in construction activities in January 2024, as reflected by the Total Activity Index, which recorded an index value of 52.9. This marks the first time that the index exceeded the neutral threshold since January 2022. Many respondents mentioned that new construction work is gradually becoming available, while some suspended projects also recommenced on a limited scale during the month.

Clarification by CBSL on Salary Hike

Central Bank of Sri Lanka (CBSL) has taken note of recent news reports in the media on comments and remarks attributed to some Members of Parliament at recent proceedings of the House with regard to the latest revision of remuneration of employees of the CBSL that were approved by the Governing Board under the triennial Collective Agreement entered into with the Trade Unions covering the period 2024- 2026. 

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