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Sri Lanka Purchasing Managers’ Index - May 2018

The Manufacturing Sector PMI recovered in May following the seasonal contraction observed in the previous month and recorded an index value of 60.6 in May with an increase of 15.1 index points from April. The recovery of PMI was largely attributable to the significant increase in production to cater both the new orders received during the month and the uncompleted orders received in April due to the new year holidays, especially in the manufacturing of textiles, wearing apparel, leather and other related products. New Orders, Stock of Purchases and Employment sub-indices also increased during the month. However, the Employment sub-index in manufacturing of textiles, wearing apparel, leather and other related products still remains in the negative territory. Meanwhile, the Suppliers’ Delivery Time sub-index marginally lengthened due to the adverse weather conditions prevailed in the latter part of the month.

The International Monetary Fund Releases the Fifth Tranche of US dollars 252 million under the Extended Fund Facility

The Executive Board of the International Monetary Fund (IMF) concluded the 2018 Article IV consultation with Sri Lanka and completed the fourth review of the three-year Extended Fund Facility (EFF), approving the disbursement of the fifth tranche amounting to SDR 177.774 million (approximately US dollars 252 million). The EFF aims at supporting the Balance of Payments and the broad economic reform agenda of the government.
The IMF acknowledged the progress made by the authorities to stabilise the economy and support growth through an improved policy mix of fiscal consolidation, prudent monetary policy and structural reforms. The IMF commended the authorities for achieving major milestones in terms of structural reforms, including the launch of the new Inland Revenue Act, automatic fuel pricing formula and the Central Bank of Sri Lanka’s Roadmap for flexible inflation targeting, while stressing the importance of sustaining the reform momentum going forward. 

External Sector Performance - March 2018

The external sector displayed a mixed performance in March 2018.  Even though expenditure on imports continued to increase, exports which peaked to historic high levels in March 2018, contributed to a lower trade deficit vis-a-vis the previous two months of the year. Earnings from tourism increased notably in March 2018 continuing the positive trend observed since January 2018. Workers’ remittances rose during the month reversing the decline recorded in February 2018. Meanwhile, the financial account of the Balance of Payments (BOP) experienced some outflows in March, particularly with the withdrawal of foreign investments from the government securities market and the Colombo Stock Exchange (CSE).  The level of gross official reserves of the country remained at a healthy level.