Headline inflation as measured by the year-on-year change in the National Consumer Price Index (NCPI, 2013=100) increased to 5.0 per cent in September 2019 from 3.4 per cent in August 2019. The monthly increases of prices of items in both Food and Non-food categories contributed to this increase as reflected in year-on-year Food and Non-food inflation recording 4.9 per cent and 5.1 per cent respectively in September 2019. In addition, the low base that prevailed in the corresponding month of the previous year also contributed for this increase.
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Inflation increased in September 2019
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The Financial Action Task Force delisted Sri Lanka from the Grey List
The Financial Action Task Force (FATF), the global policy setter on Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT), has delisted Sri Lanka from FATF’s Compliance Document which is more commonly identified as “the Grey List”. The decision was taken at the FATF Plenary held during 13-18 October 2019 in Paris.
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Financial Intelligence Unit of Sri Lanka Entered into an Agreement with INTERPOL National Central Bureau for Sri Lanka
In terms of the provisions of the Financial Transactions Reporting Act, No. 6 of 2006 (FTRA), the Financial Intelligence Unit (FIU) of Sri Lanka entered into an agreement with INTERPOL National Central Bureau for Sri Lanka (NCB Colombo) on October 11, 2019 at the Central Bank of Sri Lanka to obtain direct access to the INTERPOL Information System. -
Sri Lanka Purchasing Managers’ Index - September 2019
Manufacturing activities expanded at a slower rate in September 2019, recording an index value of 54.7 which is a decrease of 1.9 index points, compared to August 2019. This slowdown in manufacturing PMI was mainly driven by the slowdown in Production and New Orders during the month of September. Slowdown in Production could be observed, especially in manufacturing of food & beverages and textiles & wearing apparel sectors. Although the New Orders and Production expanded at a slower rate, the Stock of Purchases was increased significantly with the anticipation of high demand in future especially in manufacturing of food & beverages sector.
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External Sector Performance - August 2019
The trade deficit contracted in August 2019 as the decline in imports continued while the dip in exports in the previous month has largely recovered. Import expenditure recorded a decline of 16.6 per cent (year-on-year) and export earnings declined fractionally by 0.4 per cent (year-on-year) in August 2019, mainly due to the lower prices of major export categories.
The trade deficit fell to US dollars 540 million in August 2019 compared to the deficit of US dollars 717 million recorded in July 2019.
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Monetary Policy Review - No. 6 of 2019
The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 10 October 2019, 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 7.00 per cent and 8.00 per cent, respectively. The Board arrived at this decision following a careful analysis of 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 desired 4-6 per cent range while supporting economic growth to reach its potential over the medium term.
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10th Asia Cash Cycle Seminar - 2019, Colombo Sri Lanka
The Central Bank of Sri Lanka co-hosted the 10th Asia Cash Cycle Seminar – 2019 with Currency Research held during 23rd – 26th September 2019 at the Shangri-La Hotel, Colombo. The Cash Cycle Seminar formally known as International Commercial Cash Operations Seminar (ICCOS) is a premier global event for stakeholders of commercial cash management, distribution and circulation. Sri Lanka was the first South Asian nation to conduct this seminar in its 24-year old history.
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SEACEN-BIS High-Level Seminar and the 18th Meeting of the SEACEN Executive Committee
The Central Bank of Sri Lanka hosted the South East Asian Central Banks (SEACEN) - Bank for International Settlements (BIS) High-Level Seminar and the 18th Meeting of the SEACEN Executive Committee, in Colombo, from 26 to 28 September 2019. These events were attended by the Governor of the Central Bank of Sri Lanka, Deputy Governors and delegates of SEACEN member central banks and monetary authorities and distinguished speakers. -
The Central Bank’s View on the Sector Comment on Sri Lankan Banks by Moody’s Investors Service
On 27 September 2019, Moody’s Investors Service issued a Sector Comment on Sri Lankan banks titled “Sri Lanka’s lending rate cut is credit negative for banks.” In this respect, the Central Bank of Sri Lanka is of the view that the conclusion by Moody’s has not taken into account the complete information set, and is therefore unfounded.
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External Sector Performance - July 2019
The trade deficit widened in July 2019 as exports fell more than the decline in imports. Export earnings recorded a decline of 7.0 per cent (year-on-year) after a steady growth for several months while import expenditure declined by 2.2 per cent (year-on-year) in July 2019.
The decline in export earnings in July 2019 can be largely attributed to a reduction in earnings from petroleum products due to lower prices of bunker fuel and the export of a naval craft in July 2018, which resulted in a higher export base in the corresponding month of the previous year.
The trade deficit widened to US dollars 717 million in July 2019 compared to the deficit of US dollars 316 million recorded in June 2019.
Tourist arrivals observed a notable recovery from the impact of the Easter Sunday attacks recording an increase of 83.4 per cent in July 2019 over the preceding month.