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The Central Bank of Sri Lanka issues a Coin to mark the 75th Independence Celebration of Sri Lanka

The Central Bank of Sri Lanka (CBSL) issued an uncirculated commemorative coin in the denomination of Rupees 1000 to mark the 75th Independence Day Celebration in the country, which falls on 04.02.2023. This is the 71st commemorative coin that was issued by the Central Bank. The detailed description and specifications of the coin are given below.

External Sector Performance - December 2022

Earnings from exports in 2022 surpassed US dollars 13 billion per year for the first time, recording an increase of 4.9 per cent from the previous highest recorded in 2021. This improvement was a result of increased earnings from industrial exports, including garments, gems, diamonds and jewellery, machinery and mechanical appliances and petroleum products. Meanwhile, total import expenditure in 2022 amounted to US dollars 18,291 million, recording a decline of 11.4 per cent, year-on-year, resulted from measures to restrict non-urgent imports and liquidity constraints prevailed in the market for the most part of 2022. As a result, the deficit in the trade account in 2022 narrowed to the lowest level since 2010 to US dollars 5,185 million, from US dollars 8,139 million recorded in 2021. The major contributory factors for the decline in the cumulative trade deficit in 2022 are shown in Figure 1.

CCPI based headline inflation eased further in January 2023

Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2013=100) decreased to 54.2% in January 2023 from 57.2% in December 2022. The decline in the headline inflation is broadly in line with the disinflation path envisaged by the Central Bank of Sri Lanka (CBSL) in January 2023.

The Central Bank of Sri Lanka Maintains Policy Interest Rates at their Current Levels

The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 24 January 2023, 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 14.50 per cent and 15.50 per cent, respectively. The Board, having noted the recent and expected developments and projections on the domestic and global macroeconomic fronts, was of the view that the maintenance of the prevailing tight monetary policy stance is imperative to ensure that monetary conditions remain sufficiently tight to rein in inflationary pressures. Such tight monetary conditions, together with the tight fiscal policy, are expected to adjust inflation expectations downward, enabling the Central Bank to bring inflation rates towards the desired levels by end 2023, thereby restoring economic and price stability over the medium term.

NCPI based headline inflation decreased further in December 2022

Headline inflation, as measured by the year-on-year (Y-o-Y) change in the National Consumer Price Index (NCPI, 2013=100)1 decreased further to 59.2% in December 2022 from 65.0% in November 2022. Similarly, the Food inflation (Y-o-Y) decreased further to 59.3% in December 2022 from 69.8% in November 2022, while Non-Food inflation (Y-o-Y) decreased to 59.0% in December 2022 from 60.4% in November 2022.

Monthly change of NCPI recorded at 0.01% in December 2022. This was due to setting off the price effects of items in the Food category, which decreased by 0.20 per cent, with the price increase in the Non-food category by 0.21 per cent. Accordingly, within the Food category, significant decreases were observed in prices of Big Onions, Dry Fish, Sugar, Vegetables and Rice. However, prices of Coconut, Milk Powder and Fresh Fruits increased during the month. Within the Non-food category price increases were observed in Clothing and Footwear, and Miscellaneous Goods and Services sub-categories during December 2022.

Sri Lanka Purchasing Managers’ Index - December 2022

In December 2022, Purchasing Managers Indices indicated an expansion in Services activities and a continued setback in Manufacturing activities.

Manufacturing PMI recorded an index value of 44.8 in December, indicating a continued setback in manufacturing activities. This setback was driven by subdued performance observed in all the sub-indices, except Suppliers’ Delivery Time.

Services PMI returned to the growth territory, recording an index value of 51.6 in December 2022 after declining for two consecutive months. This increase was underpinned by the improvements observed in New Businesses, Business Activities and Expectations for Activity sub-sectors. However, Employment and Backlogs of Work continued to decline during the month.