Broad money supply (M2b) continued to expand at a high rate with a year-on-year growth of 17.2 per cent in November 2015, following the growth of 17.0 per cent in the previous month. In November 2015, the net foreign assets (NFA) of the banking sector improved with the receipt of the proceeds of the International Sovereign Bond (ISB) of US dollars 1.5 billion issued on 27 October 2015. The issuance of the ISB also facilitated a reduction of net credit obtained by the government (NCG) from the banking sector during the month of November, while credit obtained by public corporations also declined. Meanwhile, credit extended to the private sector by commercial banks remained the key driver of broad money growth, recording an increase of 27.0 per cent (year-on-year) in November 2015, compared to the growth of 26.3 per cent in October.
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Monetary Policy Review - January 2016
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Appointment of a New Deputy Governor
The Monetary Board, with the concurrence of the Hon. Minister of Finance, has promoted Assistant Governor, Mr. S Lankathilake to the post of Deputy Governor of the Central Bank of Sri Lanka (CBSL) with effect from 24th January 2016.
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External Sector Performance - November 2018
The deficit in the trade account narrowed significantly in November 2018 (year-on-year) following the noteworthy decline in the import expenditure.
Exports grew by 4.1 per cent while imports contracted by 9.1 per cent in November 2018 (year-on-year).
Earnings from tourism rebounded strongly with the start of the tourism season registering a growth of 18.2 per cent in November (year-on-year). Tourism sector is expected to continue its robust performance through 2019.
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Foreign Investment Threshold in Treasury Bills and Treasury Bonds
The Monetary Board of Central Bank of Sri Lanka has decided to reduce the threshold of foreign investments in Treasury Bills and Treasury Bonds from 10 per cent to 5 per cent out of the total outstanding stock of Treasury Bills and Treasury Bonds with effect from 18.01.2019.
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Econ-Icon Season IV Written Examination - District Winners
The Communications Department of the Central Bank of Sri Lanka, together with the Regional Offices of the Central Bank, conducted the written examination to select the 16 best school teams (in each medium, i.e. Sinhala and Tamil), for the contest ‘Econ Icon - Season IV’, the TV quiz programme, which will take place in 2019. The examination was held simultaneously at selected centres island-wide on 22nd January 2019 where teams of A/L students from schools in each District participated. Given below are the names of schools whose teams were placed first in the respective District.
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Inflation in December 2018
Headline inflation as measured by the year-on-year change in the National Consumer Price Index (NCPI, 2013=100) decreased to 0.4 per cent in December 2018 from 1.0 per cent in November 2018. The decrease observed in year-on-year inflation in December 2018 is driven by the decrease of prices of items in both Food and Non-food categories. Year-on-year Food inflation decreased to -4.5 per cent in December 2018 from -3.9 per cent in November 2018 while year-on-year Non-food inflation also decreased from 5.2 per cent in November 2018 to 4.7 per cent in December 2018.
The change in the NCPI measured on an annual average basis decreased to 2.1 per cent in December 2018 from 2.7 per cent in November 2018.
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Malicious Phishing Attempt Impersonating Central Bank
It has been reported to the Central Bank of Sri Lanka (CBSL) that a phishing attempt has been initiated targeting mainly the financial institutions of Sri Lanka and the phishing emails appear to be sent from the Employees Provident Fund (EPF) Department of CBSL with the subject “Notice From Central Bank Of Sri Lanka EPF". The content of the email was reported to be with links to malicious web sites and downloadable malicious software.
The CBSL wishes to inform the general public and institutions that the EPF Department of CBSL has not sent out such emails. The public and institutions are adviced to be alert of this ongoing phishing attempt and not open suspicious emails with the subject “Notice From Central Bank Of Sri Lanka EPF" or open its attachments or click on any of its links.
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Issuance of Treasury Bills to the Central Bank
The Central Bank of Sri Lanka (CBSL) subscribed to Treasury bills (T-bills) amounting to Rs. 90 billion in January 2019 at the request of the Treasury to assist financing needs of the government due to the delay in receiving expected foreign currency financing arrangements as envisaged in the Treasury’s cash flow for the month of January 2019. The Monetary Board has acceded to the Treasury’s request in the national interest and under exceptional circumstances.
Having reviewed the macroeconomic consequences of subscribing to T-bills by the CBSL, the Government has agreed to reverse part of the transaction in February and the balance during the first quarter of 2019 once the Government's borrowing programme is brought back on track with realisation of expected financial arrangements.
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Sri Lanka Purchasing Managers’ Index - December 2018
Manufacturing activities increased at a slower rate in December compared to November mainly driven by the slowdown in employment and production, especially in manufacturing of textiles, wearing apparels, leather and related activities. A significant decline in employment was experienced as some employees moved to seasonal jobs for better salaries. This partly impacted on decrease in production. However, new orders increased mainly driven by the manufacturing of food and beverages activities with the continued festival season demand.
Meanwhile, stock of purchases indicates an increase due to intended accumulation of stocks to fulfil the future requirements anticipating supply disruptions due to upcoming Chinese new year festival. In line with this, suppliers’ delivery time also lengthened.
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Statement by IMF Managing Director Christine Lagarde on Meeting with Sri Lanka’s Finance Minister Mangala Samaraweera and Governor Indrajit Coomaraswamy
Christine Lagarde, Managing Director of the International Monetary Fund (IMF), met today with Sri Lanka’s Finance Minister Mangala Samaraweera and Governor Indrajit Coomaraswamy.
Following the meeting, Ms. Lagarde made the following statement:
“I was pleased to meet with Minister Samaraweera and Governor Coomaraswamy this afternoon. We discussed the challenging economic environment and the policy priorities for the country. The authorities stressed Sri Lanka’s continued commitment to their economic reform agenda under the IMF-supported program.
“We agreed that a strong policy mix, with effective implementation of that agenda, is key to strengthening confidence, while putting Sri Lanka on a sustainable, high-quality growth path that would benefit its people.
“The IMF remains ready to support the Sri Lankan authorities in these endeavors and an IMF team is scheduled to visit Colombo in mid-February to resume program discussions.”