The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 24 November 2021, 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 5.00 per cent and 6.00 per cent, respectively. The Board arrived at this decision after carefully considering the macroeconomic conditions and expected developments on the domestic and global fronts. The Board noted the recent acceleration of inflation, driven mainly by supply disruptions and the surge in global commodity prices, and reiterated its commitment to maintaining inflation at the targeted levels over the medium term with appropriate measures, while supporting the economy to reach its potential in the period ahead.

The Monetary Board, at its meeting held on 17^th November 2021 has promoted Mr. K G P Sirikumara, Mr. D Kumaratunge, Mrs. U L Muthugala, and Mr. C P S Bandara to the post of Assistant Governor with effect from 17^th November 2021.

Merchandise trade deficit narrowed to US dollars 495 million in September 2021, compared to US dollars 525 million in September 2020. Earnings from exports continued to record values in excess of US dollars 1.0 billion for the fourth consecutive month in 2021 while import expenditure remained at almost the same level as in September 2020. Tourist arrivals continued the growth momentum with a notable increase over the previous month. A moderation of workers’ remittances was observed in September 2021. The financial account of the balance of payments strengthened during the month with the receipt of the proceeds of the syndicated loan facility from the China Development Bank (CDB) and remaining proceeds of the bilateral currency swap arrangement between the Central Bank of Sri Lanka and the Bangladesh Bank. Meanwhile, the weighted average spot exchange rate in the interbank market appreciated and stabilised during the month with action by the Central Bank to clear the backlog of shipments of essential imports and guidance on the exchange rate.

Sri Lanka receives around United States Dollars (USD) 7,000 million in workers’ remittances annually. On the strength of this steady foreign currency inflow, the Government of Sri Lanka (GOSL) intends to raise medium-term foreign currency financing, by securitising foreign currency receipts of the Central Bank of Sri Lanka (CBSL) under the mandatory sale of 10 per cent of workers’ remittances converted into Sri Lankan Rupees by licensed banks. Since the introduction of this mandatory sale requirement on 28 May 2021, an average of USD 25 million per month has been accumulated under this arrangement by the CBSL. With recent focused efforts to strengthen remittance flows by the CBSL in collaboration with stakeholder agencies, such inflows are expected to increase in the coming years.

The proposed Securitised Financing Arrangement (SFA) would be denominated in USD, Euro, Chinese Renminbi (RMB), Japanese Yen (Yen), or in any Gulf Cooperation Council (GCC) currency. The SFA is expected to be raised at a fixed or a floating rate for a medium-term tenure. Repayment can be in bullet or in tranches, or on a reducing balance linked to the securitised arrangement, while interest can be paid periodically, as mutually agreed. The proceeds of the SFA will be used for the purposes of financing the expenditure as approved in the Annual Budget of the GOSL.