Further to the SLDB Exchange Memorandum dated 04 July 2023 (the "Exchange Memorandum") published by the Ministry of Finance, Economic Stabilization and National Policies and subsequent announcement of results for the SLDB Invitation to Exchange (as defined in the Exchange Memorandum), outstanding eligible SLDBs (the Eligible Bonds) were converted into five (5) new variable coupon (SLFR* + 1.00%) New Treasury bonds denominated in LKR and settled on 15.08.2023 as follows:
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Settlement of Exchange of Outstanding Eligible Sri Lanka Development Bonds (SLDBs) for Five (5) New LKR Treasury Bonds pursuant to the Domestic Debt Optimisation Programme (DDO)
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Sri Lanka Purchasing Managers’ Index (Manufacturing and Services) - July 2023
Purchasing Managers Indices indicated an expansion in Services activities and a contraction in Manufacturing activities in July 2023.
Manufacturing PMI continued to decline in July 2023, recording an index value of 44.6, indicating a delay in the recovery of manufacturing activities. This setback was contributed by the subdued performance observed in all the sub-indices.
Services sector PMI increased further to record an index value of 59.5 in July 2023, indicating continued expansion in the services activities. This was led by the increases observed in New Businesses, Business Activities, Employment and Expectations for Activity. Nevertheless, Backlogs of Works remained contracted during the month.
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The Central Bank of Sri Lanka reduces the Statutory Reserve Ratio
The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 8 August 2023, decided to reduce the Statutory Reserve Ratio (SRR) applicable on all rupee deposit liabilities of Licensed Commercial Banks (LCBs) by 200 basis points, from 4.00 per cent to 2.00 per cent, with effect from the reserve maintenance period commencing 16 August 2023. This decision was taken with the view to inject liquidity to the banking system and further reduce market liquidity deficit on a permanent basis, in line with the current monetary policy stance of the Central Bank.
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The Central Bank of Sri Lanka Launches the Web Portal of the Regional Development Department
The Central Bank of Sri Lanka launched the dedicated Web Portal of the Regional Development Department (RDD Web Portal) on 04.08.2023, signifying its strategic orientation towards financial inclusion initiatives.
RDD Web Portal was developed with the financial assistance of the International Finance Corporation (IFC), a longstanding partner of the Central Bank, in promoting financial inclusion since 2018. This latest initiative is part of the overall National Financial Inclusion Strategy (NFIS) for Sri Lanka – in which, IFC played a significant role to make financial services more accessible, efficient, and affordable for all households and businesses in the country.
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Clarification on Misinformation Relating to Indian Rupee
The Central Bank of Sri Lanka (CBSL) wishes to clarify certain misrepresentations of facts currently circulating in the public domain on Indian Rupee (INR).
CBSL from time to time, authorises selected foreign currencies as designated foreign currencies with a view to facilitating international trade and cross-border banking transactions. Commencing May 1979, CBSL has occasionally recognised designated foreign currencies. Currently, following16 currencies have been authorised as designated foreign currencies under the provisions of the Banking Act and the Foreign Exchange Act, with the latest inclusion being the INR in August 2022.
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CCPI Based Headline Inflation is Back in Single Digit Levels in July 2023 after Nineteen Months
Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2021=100) decreased to 6.3% in July 2023 from 12.0% in June 2023. The decline in the headline inflation is broadly in line with the disinflation path envisaged by the Central Bank of Sri Lanka (CBSL) in July 2023.
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The Central Bank of Sri Lanka Publishes its Inaugural Monetary Policy Report (July 2023)
The Central Bank of Sri Lanka published its inaugural Monetary Policy Report (MPR) today (31.07.2023).
The publication of the Monetary Policy Report marks an important step towards improving the transparency of monetary policy and is expected to promote engagement with all stakeholders of the economy through the dissemination of information that was considered by the Monetary Board of the Central Bank of Sri Lanka in the formulation of monetary policy decisions.
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External Sector Performance - June 2023
Export earnings remained above US dollars 1.0 billion for the second consecutive month in June 2023, while import expenditure declined compared to the previous month.
Workers’ remittances and earnings from tourism continued to improve notably in June 2023, compared to the corresponding period of the previous year.
Foreign investment in the government securities market recorded a notable net inflow during June 2023.
The receipt of around US dollars 250 million from the World Bank for the budgetary support, elevated the gross official reserve level (GOR) to around US dollars 3.7 billion by end June, compared to US dollars 3.5 billion as at end May 2023.
The Sri Lanka rupee recorded some degree of volatility against the US dollar in June 2023, reflecting the determination of the exchange rate by market forces.
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Sri Lanka Purchasing Managers’ Index (Construction) - June 2023
The Statistics Department of the Central Bank of Sri Lanka (CBSL) commenced PMI survey for Construction activities in June 2017 with a view to timely capture the developments in the construction industry. The department continued the survey for six years delivering key industry insights to the CBSL, assisting the policy formulation process. Currently, the bank disseminates the other two PMI surveys, Manufacturing and Services, on monthly basis to the bank’s website. Hence, the CBSL decided to release the Construction PMI survey results as well for the information of the public starting from the June 2023 survey round.
The report on the Construction PMI survey results for the June 2023 is given below. The survey results will be published on a monthly basis via a press release and uploaded to CBSL website under the Statistics section at the end of the following month hereafter.
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Governor of the Central Bank of Sri Lanka/The Chairman of the National Coordinating Committee, Dr Nandalal Weerasinghe, Attends the Asia Pacific Group on Money Laundering Annual Plenary, during 11th to 14th July 2023 in Vancouver, Canada
Dr. Nandalal Weerasinghe, the Governor of the Central Bank of Sri Lanka in his capacity as the Chairman of the National Coordinating Committee (NCC) on Anti Money Laundering/Countering the Financing of Terrorism (AML/CFT), represented the Sri Lankan delegation to the 2023 Annual Plenary of the Asia Pacific Group on Money Laundering (APG) and the ensuing Technical Assistance and Training (TA&T) Forum held in Vancouver, Canada from 11 – 14 July 2023. The Sri Lankan delegation consisted of the expert assessors participating in the respective Mutual Evaluations of the Peoples’ Democratic Republic of Lao (Lao PDR), Nepal and Brunei.