After constructive discussions with the authorities in Colombo and during the Spring Meetings in Washington DC, Manuela Goretti, the IMF mission chief for Sri Lanka, issued the following statement:
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IMF Reaches Staff-Level Agreement on the Fourth Review of Sri Lanka’s Extended Fund Facility
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Monetary Policy Review – July 2016
The increasing trend in both headline and core inflation continued, reflecting the rise in demand driven inflationary pressures in the economy. Supply side disruptions arising from adverse weather conditions and the revisions introduced to the tax structure by the government also contributed to the upward movement in inflation in the past two months. Meanwhile, in the real sector, the available indicators suggest a continuation of the growth momentum in economic activity. In particular, power generation, tourism and port related services, construction sector, investment goods imports as well as the purchasing managers’ indices (PMI) for manufacturing and services sectors have shown improvements over the past few months.
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External Sector Performance - April 2016
Sri Lanka’s external sector recorded a modest performance in April 2016. The trade deficit narrowed on account of the higher decline in import expenditure mainly due to the drop in the importation of vehicles and rice, compared to the decline in earnings from exports during April 2016. Although workers’ remittances were marginally lower in April, earnings from tourism increased strengthening the current account of the Balance of Payments (BOP) while inflows to the financial account continued to moderate.
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Appoinment of Mr Nihal Fonseka as a Member of the Monetary Board
Mr Anthony Nihal Fonseka has been appointed by His Excellency the President as a Member of the Monetary Board of the Central Bank of Sri Lanka with effect from July 27, 2016 in terms of Section 8(2)(c) of the Monetary Law Act. -
SL Purchasing Managers’ Index - March 2018
The Manufacturing Sector PMI reached a 12-month high and signalled a strong upturn in manufacturing activities by recording 65.6 index points in March from 55.6 index points in February 2018 and was in line with the pattern observed in previous years. The increase of PMI in March was largely attributable to increasing orders in line with the seasonal demand as reflected by increase in New Orders and Production sub-indices. Stock of Purchases and Employment sub-indices also increased during the month. Further, lengthening of the Suppliers’ Delivery Time sub-index also contributed positively to the overall increase. However, most respondents, especially in the Textiles and Apparel sector, highlighted difficulties in finding both skilled and unskilled workers.
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Public Awareness on Virtual Currencies in Sri Lanka
The Central Bank of Sri Lanka (CBSL) is aware of the growing interest in virtual currencies (VCs), both domestically and internationally.
The term “virtual currencies” is commonly used to refer to digitally created representations of value that are issued by private developers and denominated in their own unit of account. Common examples of virtual currencies are cryptocurrencies such as Bitcoin, Litecoin and Ethereum. Virtual currencies are not central bank issued currency.
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Media Notice on Prorogation of Parliament of Sri Lanka
By a Gazette notification, with effect from midnight on Thursday 12th April 2018, in accordance with Article 70 of the Constitution the President has exercised his constitutional right to prorogue the Parliament. The next Parliament session will commence on 8th May 2018. During this time, no motions or questions can be tabled in Parliament and any prior actions by Parliament remain valid. The prorogation of Parliament has no impact on the functioning and operation of Government.
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The Democratic Socialist Republic of Sri Lanka - US Dollars 2.5 billion International Sovereign Bond Offering
On April 11th 2018, the Central Bank of Sri Lanka (“CBSL”), on behalf of the Democratic Socialist Republic of Sri Lanka (“Sri Lanka”), marked its return to the US dollar bond markets with a successful issuance of new US dollars 1.25 billion 5-year and US dollars 1.25 billion 10-year Senior Unsecured Fixed Rate Notes (the “Notes”) with maturity dates of April 18th 2023 and April 18th 2028 respectively. The Notes have been rated 'B1', 'B+' and 'B+' by Moody's Investors Service, Standard and Poor‟s and Fitch Ratings respectively.
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External Sector Performance - January 2018
Sri Lanka’s external sector demonstrated an improvement in January 2018 with higher inflows to the financial account in spite of the widening of the trade deficit. While earnings from merchandise exports increased, expenditure on imports also increased significantly outweighing the performance in export earnings during the month. Nevertheless, reversing the moderating trend observed during the last year, tourist earnings recorded a notable growth during January 2018. Workers’ remittances, which marked a set-back in 2017, also recorded a considerable growth on a year-on-year basis in January 2018. Meanwhile, the financial account of the Balance of Payments (BOP) continued to experience higher inflows in January 2018, with foreign investments in the government securities market and the Colombo Stock Exchange (CSE).
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Monetary Policy Review - No. 2 of 2018
Considering the favourable developments in inflation and inflation outlook as well as lower than expected real GDP growth that further widened the prevailing gap between actual and potential GDP growth, the Monetary Board, at its meeting held on 03 April 2018, decided to reduce the Standing Lending Facility Rate (SLFR), which is the upper bound of the policy interest rate corridor of the Central Bank, by 25 basis points. This decision is also expected to dampen the volatility observed in interest rates in the domestic market during the recent past.
The Monetary Board’s decision to reduce the SLFR was based on the following macroeconomic developments: