Purchasing Managers' Indices for both Manufacturing and Services activities contracted in May.
Manufacturing activities contracted during May due to adverse impacts of the third wave of COVID-19 pandemic.
In line with the escalation of the third wave of COVID-19 pandemic, Services PMI dropped further to 39.5 in May 2021, recording the lowest reading since April 2020.
Considering the difficulties faced by the borrowers of Licensed Finance Companies and Specialised Leasing Companies [hereinafter referred to as Non-Banking Financial Institutions (NBFIs)], due to the third wave of COVID- 19 pandemic, the Central Bank of Sri Lanka (CBSL) issued circular No. 06 of 2021 on concessions for COVID-19 affected businesses and individuals, requesting NBFIs to provide concessions to affected borrowers as follows:
The Central Bank of Sri Lanka (CBSL) upon obtaining approval/consent of the Director General of Health Services and the Inspector General of Police has already requested licensed commercial banks and licensed specialised banks (licensed banks) to carry out essential banking services, strictly adhering to all relevant safety measures and guidelines issued by the relevant authorities in providing banking services, under ongoing travel restrictions during the COVID-19 outbreak.
The Central Bank of Sri Lanka (CBSL), with a view of encouraging foreign currency inflows to the country, invites the private sector to pursue avenues to raise offshore funding leveraging on its strengths, with the consent of the Hon. Minister of Finance and in line with provisions of the Foreign Exchange Act No. 12 of 2017 (FEA).
In this regard, to hedge the foreign exchange risk of offshore borrowing, a zero cost swap facility would be made available by CBSL for the private sector borrowers of foreign currency for the duration of the said borrowing, which may be reviewed and renewed annually.
Considering the difficulties faced by the borrowers of licensed banks due to the third wave of COVID- 19 pandemic, the Central Bank of Sri Lanka (CBSL) has requested licensed commercial banks and licensed specialised banks (licensed banks) to provide concessions to affected borrowers as follows:
Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2013=100), increased to 4.5 per cent in May 2021 from 3.9 per cent in April 2021. This was driven by monthly increases of prices of items in both Food and Non-food categories. Accordingly, Food inflation (Y-o-Y) increased to 9.9 per cent in May 2021 from 9.0 per cent in April 2021, while Non-food inflation (Y-o-Y) increased to 2.2 per cent in May 2021 from 1.8 per cent in April 2021.
The CCPI, measured on an annual average basis, remained unchanged at 3.9 per cent in May 2021.
Headline inflation, as measured by the year-on-year (Y-o-Y) change in the National Consumer Price Index (NCPI, 2013=100), increased to 5.5 per cent in April 2021 from 5.1 per cent in March 2021. This was mainly due to the statistical effect of the low base prevailed in April 2020. Meanwhile, Food inflation (Y-o-Y) increased to 9.7 per cent in April 2021 from 8.8 per cent in March 2021 and Non-Food inflation (Y-o-Y) increased to 2.2 per cent in April 2021 from 2.0 per cent in March 2021.
The NCPI, measured on an annual average basis, remained unchanged at 5.3 per cent in April 2021.
Arrangements have been made to provide the services of Employees' Provident Fund Department (EPF) by post, e-mail, internet or through the branches of commercial banks due to the travel restrictions imposed in the country without requiring the member to visit the head office in Colombo and regional offices of the Central Bank to obtain the respective services.
The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 19 May 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. In the context of the prevailing low inflation environment and well anchored inflation expectations, and the renewed challenges posed by the third wave of the COVID-19 pandemic, the Board remains committed to maintaining the current accommodative monetary policy stance to support the sustained revival of the economy.
By virtue of the powers vested under Section 19 (1) read together with section 19 (2) of the Financial Transactions Reporting Act, No. 06 of 2006 (FTRA), financial penalties are imposed on Institutions for non-compliance with the provisions of the FTRA. The penalty may be prescribed taking into consideration the nature and gravity of relevant non- compliance of the Financial Institution or the Designated Non-Finance Business.
Accordingly, as the regulator for Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) in the country, the FIU imposed penalties, totaling to Rs. 4.0 million for the period from 1 January 2021 to 31 March 2021 to enforce compliance on Financial Institutions.
