The Monetary Board of the Central Bank of Sri Lanka issued Rules making it mandatory for hotel service providers to accept payments from persons resident outside Sri Lanka, only in foreign exchange. These Rules are published in the Gazette Extraordinary No. 2263/41dated 21 January 2022.
With the issuance of the Rules, hotel service providers registered with and licensed by the Sri Lanka Tourism Development Authority are required to;
Headline inflation, as measured by the year-on-year (Y-o-Y) change in the National Consumer Price Index (NCPI, 2013=100)1, increased to 14.0 per cent in December 2021 from 11.1 per cent in November 2021. Meanwhile, on an annual average basis, the NCPI increased to 7.0 per cent in December 2021 from 6.2 per cent in November 2021.
Inflation was driven by monthly increases of prices of items in both Food and Non-food categories. Subsequently, Food inflation (Y-o-Y) increased to 21.5 per cent in December 2021 from 16.9 per cent in November 2021, while Non-Food inflation (Y-o-Y) also increased to 7.6 per cent in December 2021 from 6.2 per cent in November 2021.
In consideration of the current and expected macroeconomic developments, the Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 19 January 2022, decided to adopt several policy measures with the view to strengthening macroeconomic stability. Accordingly, the Monetary Board decided to:
Manufacturing PMI indicates that manufacturing activities sustained the expansion on a month-on-month basis in December 2021, recording an index value of 58.1 mainly due to the expansion in New Orders and Production. All the sub-indices except Employment increased during the month.
The expansion in New Orders and Production was mainly driven by seasonal demand for the food & beverage manufacturing sector. New Orders and Production in manufacture of textile and wearing apparel sector also showed an improvement, yet at a slower pace. However, Employment sub-index declined in December compared to November 2021. The Stock of Purchases increased at a slower pace compared to the increases in New Orders and Production. Many respondents mentioned that although they wanted to build up stocks significantly ahead of the Chinese new year holidays, they were able to do it only to a certain extent due to import related issues.
The Employees’ Provident Fund (EPF) managed by the Monetary Board is Sri Lanka’s largest superannuation fund. It maintains its investment portfolio with the long-term objective of maximizing the returns to its members while preserving the value of the Fund. It operates within certain given risk parameters and has invested 94 per cent of its funds in Government securities and the balance in listed and unlisted equities, corporate debentures, trust certificates and other money market instruments. Funds are invested in a diversified portfolio, across eligible asset classes as given in the Monetary Board approved Strategic Asset Allocation subject to stipulated limits. The market value of the EPF investment portfolio as at 31.12.2020 stood at Rs. 3,243 billion.
The Government of Sri Lanka (GOSL) is perturbed over today’s announcement by S&P Global Ratings, at a time when the GOSL has diligently lined up adequate funds to repay its maturing foreign debt liabilities and its repeated assurances over the strong commitment to oblige its debt service payments, including the International Sovereign Bond (ISB) maturing on 18 January 2022.
International reserve management of a central bank is a dynamic and technical process which is usually designed to ensure that a country’s foreign assets are readily available and controlled to achieve a defined range of objectives. Accordingly, the adoption of appropriate reserve management policies relating to the asset composition, currency mix, liquidity needs, tenor, profitability, safety, etc. of investment instruments could vary from country to country and would depend on the country-specific circumstances and economic priorities.
Recent rules issued by the Central Bank of Sri Lanka (CBSL) in respect of repatriation and conversion of export proceeds to Sri Lanka Rupees (LKR) have been misinterpreted by certain parties with vested interests. In particular, unfounded speculation has been mischievously spread that the CBSL rules require converting the entirety of workers’ remittances forcibly into LKR upon the receipt of such foreign exchange funds by the Licensed Banks. Rules on conversion of export proceeds DO NOT apply to workers’ remittances. Migrant workers who channel their earnings through Licensed Banks and other formal channels may hold such funds in foreign exchange at any commercial bank. Accordingly, it is NOT mandatory for Sri Lankans working abroad to convert their remittances into LKR.
The Monetary Board of the Central Bank of Sri Lanka, acting in terms of the Regulations made under the Registered Stock and Securities Ordinance and the Local Treasury Bills Ordinance, has decided to extend the suspension of Perpetual Treasuries Limited (PTL) from carrying on the business and activities of a Primary Dealer for a further period of six months with effect from 4.30 p.m. on 05th January 2022, in order to continue the investigations being conducted by the Central Bank of Sri Lanka.
Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2013=100), increased to 12.1 per cent in December 2021 from 9.9 per cent in November 2021. Meanwhile, on an annual average basis, the CCPI increased to 6.0 per cent in December 2021 from 5.3 per cent in November 2021. An in-depth analysis of the key drivers of current inflation suggests that a large component of inflation is driven by supply side factors. A detailed explanation in this regard will be published by the Central Bank shortly.
Inflation was driven by monthly increases of prices of items in both Food and Non-food categories. Subsequently, Food inflation (Y-o-Y) increased to 22.1 per cent in December 2021 from 17.5 per cent in November 2021, while Non-food inflation (Y-o-Y) increased to 7.5 per cent in December 2021 from 6.4 per cent in November 2021.
