• Amending Limits and Terms and Conditions on Possession of Foreign Currency

    With the intention of attracting foreign currency in the hands of the public into the formal banking system, the Minister of Finance has issued an Order under Section 8 of the Foreign Exchange Act No. 12 of 2017 as follows: 

    1. Reducing the amount of foreign currency retained in possession by a person in, or resident in, Sri Lanka from USD 15,000 to USD 10,000 or its equivalent in other foreign currencies.
    2. Granting an amnesty period of 14 working days effective from the date of the Order (16 June 2022) for persons in, or resident in, Sri Lanka who hold foreign currency notes in possession for the following:

    i.To deposit into a Personal Foreign Currency Account or into a Business Foreign Currency Account as specified in the Order, or

  • The Central Bank of Sri Lanka Launches the International Transactions Reporting System

    Recognising the need to implement a comprehensive cross border transactions and domestic foreign currency transactions monitoring system as a key national priority, the Central Bank of Sri Lanka (CBSL) has implemented a new data collecting system known as the International Transactions Reporting System (ITRS) with the participation of Licensed Commercial Banks (LCBs) and Licensed Specialised Banks (LSBs). The ITRS is a comprehensive data gathering system on cross border transactions and domestic foreign currency transactions and is aimed at filling multitude of existing data gaps. It will help policy formulation in many aspects by providing valuable inputs for both statistical and regulatory purposes.

  • NCPI based headline inflation accelerated further on year-on-year basis in May 2022

    Headline inflation, as measured by the year-on-year (Y-o-Y) change in the National Consumer Price Index (NCPI, 2013=100) increased to 45.3% in May 2022 from 33.8% in April 2022. This increase in Y-o-Y inflation was driven by the monthly increases of both Food and Non-Food categories. Accordingly, Food inflation (Y-o-Y) increased to 58.0% in May 2022 from 45.1% in April 2022, while Non-Food inflation (Y-o-Y) increased to 34.2% in May 2022 from 23.9% in April 2022.

  • Sri Lanka Purchasing Managers’ Index - May 2022

    Purchasing Managers' Indices for both Manufacturing and Services activities indicated a subdued performance in May 2022.

    Manufacturing PMI recorded an index value of 50.3 in May 2022, with an increase of 13.9 index points from the seasonally low value in the month of April.

    Services PMI dropped marginally to an index value of 42.4 in May 2022 indicating a contraction in services activities for the second consecutive month.

  • External Sector Performance - April 2022

    Import expenditure declined, year-on-year, for the second consecutive month, while earnings from exports increased in April 2022. This reduction in imports has gathered pace in May 2022, as per the provisional data from Customs. As a result, the trade deficit recorded a notable year-on-year contraction. Meanwhile, tourist arrivals and workers’ remittances showed a moderate performance in April 2022, compared to the previous month. However, workers’ remittances rebounded in May 2022 supporting the stability of the external current account. Foreign investment in the government securities market and Colombo Stock Exchange (CSE) recorded marginal net inflows during April 2022. Considering continued pressures in the domestic foreign exchange market, the Central Bank introduced measures in May 2022, including the restrictions on open accounts and consignment payments terms that have helped curtail activity in the informal market and narrow the gap between the official and grey market exchange rates. Further, the Central Bank commenced providing daily guidance on the degree of volatility (with an allowable two-sided variation margin) to all licensed commercial banks from 13 May 2022 based on exchange rate determined in the interbank market on the preceding day. The implementation of these measures has brought in a greater stability in the exchange rate determination thus far. 

  • The Current Exchange Rate Arrangement: Background, Positive Impact thus far, and Expected Outcomes

    This note is intended to explain to the general public the background to the current exchange rate arrangement, and the positive impact it has already made, and expected outcomes in the period ahead.

  • CCPI based headline inflation accelerated further on year-on-year basis in May 2022

    Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2013=100) increased to 39.1% in May 2022 from 29.8% in April 2022. This increase in Y-o-Y inflation was driven by the monthly increases of both Food and Non-Food categories. Subsequently, Food inflation (Y-o-Y) increased to 57.4% in May 2022 from 46.6% in April 2022, while Non-Food inflation (Y-o-Y) increased to 30.6% in May 2022 from 22.0% in April 2022.

  • The Central Bank of Sri Lanka Reassures its Commitment to Ensuring the Availability of Foreign Exchange through the Banking System for Importation of Essential Food Items

    The Ministry of Finance issued Import Control Regulations on Payment Terms No.07 of 2022, dated 06 May 2022, and to be effective from 20 May 2022, by restricting the use of Open Account Payment Terms or Consignment Account Terms, subject to conditions, when importing goods to Sri Lanka.

    This measure complements the various other measures that are being implemented by the Central Bank of Sri Lanka (CBSL) and the Government in order to improve the foreign exchange liquidity conditions in the domestic banking system.

  • Appointment of Mr. Nihal Fonseka as a member of the Monetary Board of the Central Bank of Sri Lanka

    Mr. Anthony Nihal Fonseka was reappointed as a member of the Monetary Board of the Central Bank of Sri Lanka (CBSL) with effect from 26 May 2022. Previously, he served on the Monetary Board from July, 2016 to May 2020. 

    He obtained his BSc Degree from the University of Ceylon, Colombo and is a Fellow of the Chartered Institute of Bankers, UK and a Honorary Fellow of the Chartered Institute of Securities and Investments, UK. He is a Senior Independent Director and Chairman of the Group Audit Committee of John Keells Holdings PLC, Chairman of Phoenix Industries Ltd., Non-Executive Director and Chairman of the Audit Committee of Brandix Lanka Ltd. and a Non-Executive Director and Chairman of Investment Committee of Phoenix Ventures Ltd.

  • Central Bank of Sri Lanka Implements Extraordinary Measures to Support the Banking Sector

    The Central Bank of Sri Lanka, considering the prevailing macroeconomic conditions and its impact on the banking sector, has decided to implement the following regulatory measures to support the banking sector to facilitate effective financial intermediation and the flow of credit to the economy, whilst ensuring the soundness of the banking sector.

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