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External Sector Performance - November 2019

The trade deficit contracted marginally in November 2019 (year-on-year), with both imports and exports declining. During the first eleven months of 2019, the trade deficit contracted compared to the corresponding period in 2018, as a result of the significant decline in expenditure on imports along with a marginal increase in earnings from exports. Although tourist arrivals decreased on a year-on-year basis in November 2019, a continued recovery is seen in the tourism industry. Workers’ remittances declined (year-on-year) in November 2019 and have recorded a cumulative decline during the first eleven months of 2019. Meanwhile, the financial account of the balance of payments was augmented with the proceeds of the seventh tranche of the International Monetary Fund’s Extended Fund Facility (IMF EFF) programme and net foreign inflows to the Government securities market. However, the CSE recorded a net outflow during the month. The Sri Lankan rupee appreciated against the US dollar during 2019 and thus far during 2020 as well.

Sri Lanka Purchasing Managers’ Index - December 2019

Manufacturing PMI expanded at a slower pace in December 2019 recording an index value of 54.3 mainly due to the slower expansion in New Orders, Production and Stock of Purchases.

All the sub-indices indicated an expansion, yet at a slower pace, compared to November 2019. New Orders and Production expanded at a slower rate owing to the slowdown in manufacturing of textile and wearing apparel sector. A significant slowdown in employment was experienced, particularly in manufacturing of wearing apparel sector as potential employees were attracted to seasonal jobs for better remuneration. This slowdown in employment partly impacted the slowdown in production.

Road Map 2020 - Monetary and Financial Sector Policies for 2020 and Beyond

Today, the Sri Lankan economy is at a crossroads. Decades of policy making as a sovereign nation have produced improvements in many aspects of the economy. There was significant social upliftment. Nevertheless, tough challenges remain – below potential growth, persistence of poverty pockets, underutilisation of productive resources, inadequate expansion and diversification of exports, shortfall of non-debt creating capital inflows, large credit and interest rate cycles, and high fiscal deficits and public debt levels. These challenges, which have been the outcomes of policy as well as non-policy factors, need to be addressed decisively for the economy to takeoff to a high and sustainable growth path. It is also essential that benefits of such high growth are distributed fairly across society and opportunities are created for all, leading to a more prosperous, happy and content nation, with equitable distribution of incomes and opportunities. Such an outcome needs innovative policies emanating from and backed by fresh innovative thinking.

Extension of the Suspension of Business of Perpetual Treasuries Limited

The Monetary Board of the Central Bank of Sri Lanka, acting in terms of the Regulations made under the Registered Stock and Securities Ordinance and the Local Treasury Bills Ordinance, has decided to extend the suspension of Perpetual Treasuries Limited (PTL) from carrying on the business and activities of a Primary Dealer for a period of six months with effect from 4.30 p.m. on 05th January 2020, in order to continue the investigations being conducted by the Central Bank of Sri Lanka.