In terms of the provisions of the Financial Transactions Reporting Act, No. 6 of 2006 (FTRA), the Financial Intelligence Unit (FIU) of Sri Lanka entered into a Memorandum of Understanding (MOU) with the Securities and Exchange Commission of Sri Lanka (SEC) on June 19, 2018 at the Central Bank of Sri Lanka to establish a framework for sharing information on supervisory findings based on comprehensive risk-based supervision focused on Anti-Money Laundering (AML) /Countering the Financing of Terrorism (CFT) in the Securities Sector.

The Manufacturing Sector PMI recovered in May following the seasonal contraction observed in the previous month and recorded an index value of 60.6 in May with an increase of 15.1 index points from April. The recovery of PMI was largely attributable to the significant increase in production to cater both the new orders received during the month and the uncompleted orders received in April due to the new year holidays, especially in the manufacturing of textiles, wearing apparel, leather and other related products. New Orders, Stock of Purchases and Employment sub-indices also increased during the month. However, the Employment sub-index in manufacturing of textiles, wearing apparel, leather and other related products still remains in the negative territory.

The external sector displayed a mixed performance in March 2018.  Even though expenditure on imports continued to increase, exports which peaked to historic high levels in March 2018, contributed to a lower trade deficit vis-a-vis the previous two months of the year. Earnings from tourism increased notably in March 2018 continuing the positive trend observed since January 2018. Workers’ remittances rose during the month reversing the decline recorded in February 2018. Meanwhile, the financial account of the Balance of Payments (BOP) experienced some outflows in March, particularly with the withdrawal of foreign investments from the government securities market and the Colombo Stock Exchange (CSE).  The level of gross official reserves of the country remained at a healthy level.

A misleading news item has been disseminated in relation to Sri Lanka’s foreign reserves and external debt servicing.

The contents of the news item portray a misleading picture of the country’s external position. While stating that around USD 8.9 billion of borrowings by the government were absorbed to Central Bank reserves during 2015-2018, the article provides no consideration on the significant debt repayment effected by utilization of reserves during the period, which the Central Bank is obligated to as the official debt manager of the government.