Manufacturing PMI increased at a slower rate in February 2020 recording an index value of 53.6 mainly due to the slower expansion in New Orders and Employment, while expectations for next three months decreased significantly due to COVID-19 outbreak.
Services sector expansion slowed down in February 2020, compared to January 2020, underpinned by the slower expansion observed in New Businesses, Business Activity and Expectations for Activity due to the impact of COVID-19 outbreak.
The Central Bank of Sri Lanka (CBSL) wishes to inform that the following measures have been adopted by CBSL during the public holiday period announced by the Government.
The Monetary Board of the Central Bank of Sri Lanka, at an urgent meeting to review its monetary policy stance on 16 March 2020, decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 25 basis points to 6.25 per cent and 7.25 per cent, respectively, with effect from 17 March 2020 and to reduce the Statutory Reserve Ratio (SRR) on all rupee deposit liabilities of licensed commercial banks (LCBs) by 1.00 percentage point to 4.00 per cent, with effect from the current reserve maintenance period. The Board arrived at this decision in consideration of the urgent need to support economic activity with the rapid global spread of the COVID-19 pandemic and its possible further spread in Sri Lanka.
The promotional campaign of “2020 - Year of Digital Transactions” was launched by Deshamanya Prof. W D Lakshman, Governor of Central Bank of Sri Lanka (CBSL) on 11 March, 2020 at the CBSL amidst the attendance of senior bankers, officials of non-banking financial institutions, central bankers and other dignitaries. Following the launch, Mr. D Kumaratunge, Director Payments and Settlements of CBSL, introduced the advertising campaign of “Cash වදේ”. The campaign depicts the worries that both consumers and businesses face due to using cash, such as the risk of being robbed or losing time in queues.
With a view to accelerating economic growth in the country, special credit support scheme to eligible Small and Medium Enterprise borrowers of Banking sector had been introduced. Subsequently, considering the importance of extending the benefits of the borrowers of Non-Bank Financial Institutions Sector (NBFI), it was decided to introduce similar scheme for NBFI.
The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 04 March 2020, 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 6.50 per cent and 7.50 per cent, respectively, and thereby continue its accommodative monetary policy stance. The Board arrived at this decision following a careful analysis of the current and expected developments in the domestic economy and the financial market as well as the global economy. The decision of the Monetary Board is consistent with the aim of maintaining inflation in the 4-6 per cent range while supporting economic growth to reach its potential over the medium term.
Headline inflation as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2013=100) increased to 6.2 per cent in February 2020 from 5.7 per cent in January 2020. This was solely driven by the statistical effect of the low base prevailed in February 2019. Food inflation (Y-o-Y) stood at 14.7 per cent in February 2020, while Non-food inflation (Y-o-Y) recorded at 2.8 per cent.
The change in the CCPI measured on an annual average basis increased to 4.6 per cent in February 2020 from 4.5 per cent in January 2020.
Land Valuations Indicator (LVI) for Colombo District compiled by the Central Bank of Sri Lanka (CBSL), reached 138.9 during the 2nd half of 2019, recording an increase of 10.4 per cent compared to the 2nd half of 2018. All three sub-indicators of LVI, namely Residential, Commercial and Industrial have contributed to this increase.
Residential LVI recorded the highest year-on-year increase of 10.7 per cent, while both the Commercial LVI and Industrial LVI increased by 10.3 per cent . Meanwhile, the LVI increased by 5.1 per cent in 2nd half of 2019 from 1st half of 2019.
Headline inflation as measured by the year-on-year (Y-o-Y) change in the National Consumer Price Index (NCPI, 2013=100)increased to 7.6 per cent in January 2020 from 6.2 per cent in December 2019. This was driven by monthly increase of prices of items in both Food and Non-food categories. Food inflation (Y-o-Y) increased substantially from 8.6 per cent in December 2019 to 13.7 per cent in January 2020, the highest since November 2017. Further, Non-food inflation (Y-o-Y) stood at 3.0 per cent in January 2020.
The Monetary Board of the Central Bank of Sri Lanka decided to discontinue the compilation and publication of SLIBOR with effect from 01 July 2020. This decision was taken in consideration of the lack of usage of SLIBOR in benchmarking loan products in the domestic financial market, the global trend of phasing out the compilation and publication of offered rates including the London Interbank Offered Rate (LIBOR), requests from several Licensed Commercial Banks (LCBs) to discontinue the reporting of offered rates in the context of thin interbank market volumes for longer tenures, and the availability of alternative benchmark interest rates in the domestic financial market.
