• The Government of Sri Lanka and the World Bank sign an agreement for financing of $150 million to strengthen the resilience of Sri Lanka’s financial sector

    The Government of Sri Lanka (GOSL) and the World Bank signed an agreement for $150 million in financing for Sri Lanka to strengthen the resilience of the financial sector through the Financial Sector Safety Net Strengthening Project (FSSNP). In parallel, the project agreement between the World Bank and the Central Bank of Sri Lanka (CBSL) was also entered in respect of the project implementation arrangements.

    The project development objective is to strengthen Sri Lanka's financial sector safety net with the focus on the Sri Lanka Deposit Insurance Scheme (SLDIS), which is managed by the CBSL. The project also aims to strengthen the financial and institutional capacity of SLDIS in line with international best practices for effective deposit insurance schemes.

  • Governing Board Appoints Six New Assistant Governors

    The Governing Board, at its meeting held on 19th January 2024 promoted Dr. C Amarasekara, Mrs. W A Dilrukshini, Dr. P K G Harischandra, Mrs. D S W Samaratunga, Mrs. E H Mohotty and Mrs. R D T Gunasekara to the post of Assistant Governors with effect from 22nd January 2024.

  • External Sector Performance - December 2023

    Merchandise trade deficit for 2023 recorded the lowest level since 2010, supported by relatively larger contraction in import expenditure than that of export earnings. 

    The trade deficit widened in December 2023 compared to December 2022. However, imports continued to remain moderated, despite recent relaxations of import restrictions.

    Workers’ remittances recorded a healthy level of around US Dollars 6 billion in 2023 and recorded the highest monthly value in December 2023 since April 2021. 

    Earnings from tourism for the year 2023 are estimated to have surpassed US dollars 2 billion as a result of a notable revival in tourist arrivals.

    Foreign investments in the government securities market recorded net inflows in 2023.

  • CCPI based headline inflation continued to increase in January 2024

    Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2021=100) increased to 6.4% in January 2024 from 4.0% in December 2023. This increase in the headline inflation is mostly in line with the projections envisaged by the Central Bank of Sri Lanka (CBSL).

    The Food inflation (Y-o-Y) increased to 3.3% in January 2024 from 0.3% in December 2023, while the Non-Food inflation (Y-o-Y) increased to 7.9% in January 2024 from 5.8% in December 2023. Monthly change of CCPI recorded 2.87% in January 2024 due to the price increases of 1.21% observed in the items of Food category and 1.66% observed in the items of Non-Food category. Meanwhile, the core inflation (Y-o-Y), which reflects the underlying inflation in the economy, increased to 2.2% in January 2024 from 0.6% in December 2023.

  • Sri Lanka Purchasing Managers’ Index (Construction) - December 2023

    Construction PMI, as reflected by the Total Activity Index value of 48.6 in December 2023, indicated a slower contraction in construction activities compared to last month. The respondents mentioned that the limited availability of project work continued to hamper the activity levels.

    New Orders declined in December, broadly at a similar pace compared to the previous month. Many respondents mentioned that currently they are heavily relying on foreign-funded projects. Meanwhile, Employment contracted mainly due to the layoffs in line with the project completions. Further, Quantity of Purchases remaind contracted during the month since the ongoing work and the upcoming projects continued to decline. In the meantime, Suppliers’ Delivery Time remained lengthened in Decemeber.

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

    The Monetary Policy Board of the Central Bank of Sri Lanka, at its meeting held on 22 January 2024, 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 9.00 per cent and 10.00 per cent, respectively. The Board arrived at this decision following a comprehensive assessment of domestic and international macroeconomic developments in order to maintain inflation at the targeted level of 5 per cent over the medium term, while enabling the economy to reach its potential. The Board took note of the effects of the recent developments in taxation and supply-side factors that are likely to pose upside pressures on inflation in the near term. However, the Board viewed that the impact of these developments would not materially change the medium-term inflation outlook. Further, the Board noted the space created by past monetary policy easing measures and the decline in the risk premia attached to government securities for further downward adjustment in market lending interest rates. The Board underscored that the envisaged benefit of further reduction in market lending interest rates needs to be adequately and swiftly passed on to the businesses and individuals by financial institutions.

  • IMF Staff Concludes Visit to Sri Lanka

    An International Monetary Fund (IMF) mission team led by Mr. Peter Breuer visited Sri Lanka from January 11 to 19, 2024 to discuss recent macroeconomic developments and progress in implementing economic and financial policies under the Extended Fund Facility (EFF) arrangement. At the end of the mission, the IMF issued the following press release on 19 January 2024, which can be accessed from the link below.

  • Sri Lanka Purchasing Managers’ Index (Manufacturing and Services) - December 2023

    Both Manufacturing and Services Purchasing Managers’ Indices increased in December 2023

    Manufacturing PMI recorded an index value of 52.7 in December 2023, indicating an expansion in manufacturing activities. This improvement was attributable to the increases observed in all the sub-indices except Employment.

    Services sector PMI recorded an index value of 58.9 in December 2023 indicating an expansion in the services activities. This was led by the increases observed in New Businesses, Business Activities and Expectations for Activity.

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  • CCPI based headline inflation increased in December 2023

    Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2021=100) increased to 4.0% in December2023 from 3.4% in November 2023. This increase in the headline inflation is mostly in line with the projections envisaged by the Central Bank of Sri Lanka (CBSL) in November 2023. 

    After five months of continuous deflation, the Food category recorded inflation (Y-o-Y) of 0.3% in December 2023 from 3.6% deflation (Y-o-Y) recorded in November 2023. Meanwhile, the Non-Food inflation (Y-o-Y) declined to 5.8% in December 2023 from 6.8% in November 2023. Monthly change of CCPI recorded 0.89% in December 2023 due to the combined effect of price increases of 1.16% observed in items of Food category and price decreases of 0.27% observed in the items of Non-Food category. The core inflation (Y-o-Y), which reflects the underlying inflation in the economy, decreased to 0.6% in December 2023 from 0.8% in November 2023

  • SL Purchasing Managers’ Index (PMI) for Construction Industry – November 2023

    Construction PMI recorded a Total Activity Index value of 44.3 in November 2023, indicating a contraction in construction activities compared to last month. The respondents mentioned that the low level of new projects and the decline in work related to ongoing projects, as they are in the final stages, hampered the activity levels. 

    New Orders declined at a higher pace in November compared to the previous month. However, many respondents expect an acceleration in awarding of projects, especially government-funded projects, in the first half of the next year. Employment continued to contract as the companies tend to operate with minimum staff under the current industry situation. Further, Quantity of Purchases declined in line with the decrease in construction work. In the meantime, Suppliers’ Delivery Time remained lengthened during the month.

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