• Securitised Financing Arrangement for the Government of Sri Lanka

    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.

  • The Central Bank publishes “Recent Economic Developments: Highlights of 2021 and Prospects for 2022”

    The Central Bank of Sri Lanka today published “Recent Economic Developments: Highlights of 2021 and Prospects for 2022” online. The publication can be downloaded via the Central Bank Website in Sinhala, Tamil and English languages.

    An overview of the performance of the Sri Lankan economy in 2021, as reflected in “Recent Economic Developments”, the box articles in chapter 1 and the infographic published therein are given below:

  • Future Benefits for Sri Lankan Expatriates Working Abroad to be Linked to Quantum of Remittances

    Remittances by Sri Lankans employed abroad have been an important flow of foreign exchange into the country, with an annual average value of over US dollars 7 billion in the past five years. Considering the importance of this steady non-debt inflow, the Government and the Central Bank of Sri Lanka (CBSL) are in the process of taking steps to ensure that remittances reach their full potential in a manner that is beneficial to the worker as well as to the country.

  • New rules to convert export proceeds will result in multiple benefits to the country and have no impact on inward remittances by Sri Lankans working abroad

    Sri Lanka has embarked on a focused path towards ensuring macro-economic and financial system stability, having faced strong headwinds from the COVID-19 pandemic. The pandemic resulted in a substantial loss of foreign exchange revenues to the country, but unprecedented support provided by the Government and the Central Bank of Sri Lanka (CBSL), from fiscal, monetary and public health aspects, has helped a strong rebound of the economy as well as a considerable recovery in some foreign exchange earning sectors. The tourism sector is also expected to display a notable recovery in the period ahead, and concerted efforts are taken to improve worker remittance inflows through formal channels. Recent tensions in the forex market have also highlighted the need for Sri Lanka to increase its reliance on foreign exchange earnings over time to strengthen the economy, rather than increasing its foreign borrowings which exposes the economy to various types of shocks. 

  • Moratoria to COVID-19 affected businesses and individuals has exceeded Rs.4,000 billion: Saubagya loans amount to over Rs.179 billion

    The Central Bank of Sri Lanka (CBSL) has implemented several schemes to assist COVID-19 affected borrowers through Financial Institutions (FIs) supervised by the CBSL. The schemes included extended repayment periods, concessionary rates of interest, working capital loans, debt moratoriums and restructuring/rescheduling of credit facilities for affected borrowers. 

    These concessions greatly assisted the small and medium enterprises of many affected sectors: tourism, apparel, plantation, information technology, logistic service providers, three-wheeler owners, operators of school vans, lorries, small goods transport vehicles and buses, and private sector employees.  

  • Writ Application against Governor Ajith Nivard Cabraal dismissed by the court of Appeal

    The Writ Application (CA Writ 417/2021) filed by Mr Keerthi Thennekoon (former Governor of the Southern Province)  against the appointment of Governor Ajith Nivard Cabraal as the Governor of the Central Bank was dismissed by the Court of Appeal today, on the grounds that the Petitioner has not established a prima facie case.

    Another Writ Application against Governor Cabraal’s appointment filed by Mr Ariyawansa Dissanayake (former Presidential candidate) was also withdrawn by the Petitioner last week.

  • Establishment of Foreign Remittances Facilitation Department of the Central Bank of Sri Lanka

    Workers' remittances have been a key pillar of Sri Lanka's foreign currency earnings that has nearly 100 per cent of domestic value addition, providing a substantial cushion for external sector resilience of the country. Workers' remittances have covered around 80 per cent of the annual trade deficit over the past two decades, and strengthening remittances inflows to the country brings several socio-economic benefits including the smooth supply of forex inflows to the formal banking system and the reduction of income and regional disparities.

  • Imposition of Administrative Penalties by the Financial Intelligence Unit (FIU) to Enforce Compliance on Financial Institutions during the Third Quarter of 2021

    By virtue of the powers vested under Section 19 (1) read together with section 19 (2) of the Financial Transactions Reporting Act, No. 06 of 2006 (FTRA), financial penalties are imposed on Institutions for non-compliance with the provisions of the FTRA. The penalty may be prescribed taking into consideration the nature and gravity of relevant non- compliance of the Financial Institution.

    Accordingly, as Sri Lanka’s regulator for Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT), the FIU collected penalties as indicated below, amounting to Rs. 2.0 million in total for the period from 1 July 2021 to 30 September 2021 to enforce compliance on Financial Institutions. The money collected as penalties were credited to the Consolidated Fund.

  • CCPI based Inflation increased to 7.6 per cent in October 2021

    Headline inflation, as measured by the year-onyear (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2013=100), increased to 7.6per cent in October 2021 from 5.7 per cent in September 2021. This was driven by monthly increases of prices of items in both Food and Nonfood categories. Subsequently, Food inflation (Yo-Y) increased to 12.8 per cent in October 2021 from 10.0 per cent in September 2021, while Nonfood inflation (Y-o-Y) increased to 5.4 per cent in October 2021 from 3.8 per cent in September 2021.

  • Central Bank Issues New Rules on Conversion of Export Proceeds

    The Monetary Board of the Central Bank issued new Rules, as published in the Gazette Extraordinary No. 2251/42 dated 28 October 2021, in respect of repatriation of export proceeds into Sri Lanka and conversion of such export proceeds to Sri Lanka Rupees, repealing the existing Rules issued under the Monetary Law Act, No.58 of 1949. The new Rules are applicable for both exporters of goods and services in Sri Lanka. 

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