• The Central Bank of Sri Lanka Denies Media Reports on Macroeconomic Projection Updates

    Several media reports have been brought to the notice of the Central Bank of Sri Lanka (CBSL) in which certain macroeconomic projections are erroneously attributed to the CBSL. 

    The CBSL has not released to the public any update to its macroeconomic projections since the publication of the CBSL Annual Report in April 2020. Given the conditions of uncertainty created by the COVID-19 pandemic, frequent updates to macroeconomic projections are required, and the CBSL has continued to monitor standard indicators of economic activity as they become available. It has been using unconventional indicators as well on a real time basis in its analysis and policy guidance. 

  • The Central Bank enters into a Bilateral Currency Swap Agreement with the Reserve Bank of India

    The Central Bank of Sri Lanka (CBSL) and the Reserve Bank of India (RBI) have entered into a currency swap agreement on 24th July 2020 under the Framework on Currency Swap Arrangement for South Asian Association for Regional Cooperation (SAARC) countries for 2019 - 2022. This would provide short-term financing to the CBSL to meet the country’s balance of payment requirements.

    The intention of the CBSL in entering into this Swap agreement was to be able to maintain a sufficient short-term foreign exchange liquidity while preserving the foreign currency reserve position of the country intact. The challenging external economic environment of Sri Lanka today is the result largely of this Covid-19 pandemic. This Swap agreement has the approval of the Cabinet of Ministers, received on the recommendation of the Monetary Board of the Central Bank of Sri Lanka.

  • The Central Bank clarifies its Repurchase Agreement with the Federal Reserve Bank, New York

    The Central Bank of Sri Lanka (CBSL) has recently entered into an agreement with the Federal Reserve Bank, New York (FED) as a temporary source of US dollar liquidity to be used when required. The facility, in technical jargon, is an overnight Repurchase (Repo) facility available for “Foreign and International Monetary Authorities” (FIMA). Many central banks in the world have resorted to this facility to meet their short-term US dollar liquidity requirements. This facility enables a Central Bank to secure short-term funding when needed, without having to make any sudden structural adjustments to its long-term investment portfolios in foreign exchange. 

  • Imposition of penalties to enforce compliance on Financial Institutions during 2019 and 2020 by the Financial Intelligence Unit (FIU)

    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 can be imposed on Institutions for non-compliance with the provision of the FTRA. The penalties may be prescribed taking into consideration the nature and gravity of relevant noncompliance of the Financial Institution or the Designated Non-Finance Business (DNFBs).

  • The Central Bank approved 3,985 new loans amounting to Rs.11,829 million under the Saubagya COVID-19 renaissance facility during the period 13-23 July 2020

    The Central Bank of Sri Lanka (CBSL) approved 3,985 new loan applications, amounting to Rs.  11,829 million, submitted by licensed banks under the Saubagya COVID-19 renaissance facility Phase II & III during the period 13-23 July 2020. 

    With the new approvals mentioned above, the cumulative number of loan applications so far approved by the CBSL under the Saubagya COVID-19 renaissance facility increased to 26,291 as of 23rd July 2020. Similarly, the total value of   loans approved by the CBSL increased to Rs. 72,079 million as of 23rd July 2020. The licensed banks had already disbursed Rs. 45,777 million among 18,007 borrowers island-wide as of 23rd July 2020 as shown in Table – 1 below.

  • Compensation Payments to the depositors of ETI Finance Limited (ETIFL) and Swarnamahal Financial Services PLC (SFSP)

    Central Bank of Sri Lanka (CBSL) has taken measures to pay the compensation payments to the depositors of ETIFL and SFSP from the Sri Lanka Deposit Insurance and Liquidity Support Scheme (SLDILSS), upon suspension of the finance businesses of ETI Finance Limited (ETIFL) and Swarnamahal Financial Services PLC (SFSP) with effect from 13.07.2020. Accordingly, compensation payment will be commenced from Saturday 25.07.2020 through selected branches of the People’s Bank Island wide. In terms of the regulations of the SLDILSS, maximum compensation of Rs. 600,000/- per depositor will be paid through 45 branches of People’s Bank Island wide.

  • NCPI based Inflation increased in June 2020

    Headline inflation as measured by the yearon-year (Y-o-Y) change in the National Consumer Price Index (NCPI, 2013=100) increased to 6.3 per cent in June 2020 from 5.2 per cent in May 2020. This was mainly driven by the monthly increase in prices of items in the Food category. Accordingly, Food inflation (Y-o-Y) increased to 13.6 per cent in June 2020 from 11.1 per cent in May 2020, while Non-food inflation (Y-o-Y) remained unchanged at 0.8 per cent in June 2020. 

    The change in the NCPI measured on an annual average basis increased to 5.6 per cent in June 2020 from 5.2 per cent in May 2020.

  • Continuation of Measures Taken to Preserve the Foreign Currency Reserve Position of Sri Lanka

    With a view to preserve the foreign currency reserve position of the country and considering the possible negative impact to the Sri Lankan economy due to the outbreak of Covid-19 pandemic, the Hon. Minister of Finance, Economic and Policy Developments with the recommendation of the Monetary Board of the Central Bank of Sri Lanka and the approval of the Cabinet of Ministers have issued an Order introducing following measures on outward remittances on Capital Transactions for a period of six (06) months effective from 02 July 2020.

  • Sri Lanka Purchasing Managers’ Index - June 2020

    Benefitting from the normalizing of economic activities in the country following the complete relaxation of restrictions for mobility, the Manufacturing PMI increased significantly in June 2020 recording 67.3 with a month-on-month increase of 18.0 index points compared to May 2020.

  • Appointments to the Monetary Board - Mr Sanjeeva Jayawardena PC, Dr (Mrs) Ranee Jayamaha and Mr Samantha Kumarasinghe

    Three new members have assumed duties as serving members of the Monetary Board of the Central Bank of Sri Lanka (CBSL), pursuant to being appointed to the Board by His Excellency the President, under section 8(2)(c) of the Monetary Law Act with the approval of the Constitutional Council.

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