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The Central Bank of Sri Lanka Continues its Accommodative Monetary Policy Stance

The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 18 January 2021, decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank at their current levels of 4.50 per cent and 5.50 per cent, respectively. The Board arrived at this decision after carefully considering the macroeconomic conditions and expected developments on the domestic and global fronts. The Board, having noted the reduction in overall market lending rates during 2020, stressed the need for a continued downward adjustment in lending rates to boost economic growth in the absence of demand driven inflationary pressures, particularly considering the significant levels of excess liquidity prevailing in the domestic money market. As announced in November 2020, the Board decided to introduce priority sector lending targets for the micro, small and medium scale enterprises (MSME) sector to support a broadbased economic revival, in consultation with the banking community.

Sri Lanka Purchasing Managers’ Index - December 2020

Benefitting from the gradual normalising of economic activities in the country, the Manufacturing PMI continued to increase in December 2020, on a month-on-month basis, recording an index value of 61.2. This was mainly attributable to the increases observed in Production, New Orders, Employment, and Stock of Purchases sub-indices.

External Sector Performance - November 2020

Amidst a decline in earnings from exports, a number of positive developments were observed in the external sector in November 2020, including a lower trade deficit, and a notable increase in workers’ remittances. Merchandise imports continued to decline supported by the continuation of restrictions on non-essential imports and low global oil prices. There was a notable decline in merchandise exports in November compared to previous months due to disturbances to domestic production processes with the second wave of the COVID-19 pandemic. Workers’ remittances continued to record a growth in November as well. In the financial account, both foreign investment in the government securities market and the Colombo Stock Exchange (CSE) recorded marginal net outflows in November 2020. The level of gross official reserves amounted to US dollars 5.6 billion at end November 2020, while the Sri Lankan rupee depreciated against the US dollar marginally during the month of November 2020.

Swarnamahal Financial Services PLC - Resumption of Business for a Limited Purpose on a Conditional Basis

The Monetary Board of the Central Bank of Sri Lanka (Monetary Board) has made an order permitting Swarnamahal Financial Services PLC (SFSP) to resume business notionally for a limited purpose and limited time under the supervision of the Panel of Management appointed by the Monetary Board (Panel of Management), subject to several strict conditions, in the public interest and in the interests of the depositors of the Company, for a limited period of three (03) months from 13th January 2021 to 12th April 2021, in terms of Section 31(5)(a) of Finance Business Act, No. 42 of 2011 (FBA), only for the purpose of repayment up to fifty percent (50%) of the remaining deposits of the Company (repayment plan).

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