Purchasing Managers' Indices for both Manufacturing and Services activities contracted in April.
Following the seasonal pattern, manufacturing PMI contracted to 44.3 in April 2021 with a decline of 22.7 index points from March 2021.
Services PMI dropped to 48.9 in April 2021, reversing the growth momentum observed in the Services sector for four straight months.
The Central Bank of Sri Lanka wishes to inform the eligible depositors/relevant legal beneficiaries of eligible deposits of Swarnamahal Financial Services PLC (SFSP) that the payment of additional compensation under the Sri Lanka Deposit Insurance and Liquidity Support Scheme will commence from 10.05.2021 onwards. Accordingly, the eligible depositors/relevant legal beneficiaries of eligible deposits can collect their claims from any People’s Bank branch commencing from 10.05.2021 by producing the relevant documents. The eligible depositors/beneficiaries are advised to avoid gathering in large numbers at the People’s Bank premises and to strictly comply with the health guidelines.
Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2013=100) decreased to 3.9 per cent in April 2021 from 4.1 per cent in March 2021. This was driven by monthly decreases of prices of items in the Food category. Meanwhile, Food inflation (Y-o-Y) decreased to 9.0 per cent in April 2021 from 9.6 per cent in March 2021, while Non-food inflation (Y-o-Y) remained unchanged at 1.8 per cent in April 2021.
The change in the CCPI measured on an annual average basis decreased marginally to 3.9 per cent in April 2021 from 4.0 per cent in March 2021.
In terms of Section 35 of the Monetary Law Act No. 58 of 1949, the seventy first Annual Report of the Monetary Board of the Central Bank of Sri Lanka was presented to Hon. Mahinda Rajapaksa, the Prime Minister and the Minister of Finance, by Deshamanya Professor W D Lakshman, the Governor of the Central Bank of Sri Lanka.
Regulations issued under the Foreign Exchange Act, No. 12 of 2017 (FEA) have been revised for further simplification and clarity improvement, with the objectives of achieving greater efficiency in the conduct of cross-border foreign exchange transactions alongside further facilitating economic activities of the stakeholders through greater convenience of doing business.
These revised foreign exchange policy framework as highlighted above, has been implemented with effect from 22 March 2021. Inter-alia, key highlights of policy measures so introduced, are as follows.
Headline inflation as measured by the year-on-year (Y-o-Y) change in the National Consumer Price Index (NCPI, 2013=100) increased to 5.1 per cent in March 2021 from 4.2 per cent in February 2021. This was due to the statistical effect of the low base prevailed in March 2020. Meanwhile, Food inflation (Y-o-Y) increased to 8.8 per cent in March 2021 from 6.9 per cent in February 2021 and Non-Food inflation (Y-o-Y) increased marginally to 2.0 per cent in March 2021 from 1.9 per cent in February 2021. The change in the NCPI measured on an annual average basis decreased to 5.3 per cent in March 2021 from 5.5 per cent in February 2021.
The increase in exports to the pre-pandemic levels, the notable increase in workers’ remittances and the relative stability in the domestic foreign exchange market supported Sri Lanka’s external sector in February 2021. The trade deficit in February 2021 broadly remained unchanged at the level reported a year ago. In the financial account, both foreign investment in the government securities market and the Colombo Stock Exchange (CSE) recorded net outflows in February 2021. The SAARCFINANCE swap facility of US dollars 400 million obtained from the Reserve Bank of India in July 2020 was repaid in February 2021 upon maturity. Net inflows to the domestic foreign exchange market eased the pressure on the exchange rate during the month and the regulatory measures enabled the Central Bank to absorb foreign exchange on a net basis, to build up gross official reserves.
The Monetary Board of the Central Bank of Sri Lanka (CBSL) issued directions on foreign currency borrowings by Licensed Finance Companies (LFCs) on 9th April 2021 with a view to provide flexibility for LFCs to obtain low-cost funding from foreign sources to support their business expansions. The objectives of these directions are to stabilise any financial volatilities created by the foreign funding exposures of LFCs and provide a risk management framework for such foreign currency borrowings.
The Monetary Board, having considered the requests made by exporters of goods, has amended the Rule No. 2 of 2021 as published in the Gazette Extraordinary No. 2218/38 dated 09.03.2021 to reflect the following.
Indicating a strong revival in manufacturing activities in the country, the manufacturing PMI reached a 9-month high at 67.0 in March 2021. This was largely attributable to the increases observed in Production, New Orders, and Stock of Purchases sub-indices.The significant increases in New Orders and Production sub-indices, particularly in the manufacture of food & beverages and textile & wearing apparel sectors, have mainly contributed to the improvement in the overall index. Many respondents in the manufacture of food & beverages sector highlighted that they experienced higher levels of sales and production during March 2021 ahead of the New Year festival season. Further, respondents from the textile & wearing apparel sector mentioned that they increased production during the month to cover-up seasonal holidays.
