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 July 2021, in order to continue the investigations being conducted by the Central Bank of Sri Lanka.
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Extension of the Suspension of Business of Perpetual Treasuries Limited
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New Order issued under Foreign Exchange Act to Preserve the Foreign Exchange Position of Sri Lanka
With a view to assist and maintain the financial system stability by minimizing the pressure on the exchange rate and preserving the foreign currency reserve position of the country, the Hon. Minister of Finance with the recommendation of the Monetary Board of the Central Bank of Sri Lanka and the approval of the Cabinet of Ministers has issued an Order under Section 22 of the Foreign Exchange Act, No.12 of 2017, published in the Extraordinary Gazette Notifications No. 2234/49 dated 2 July, 2021.
Accordingly following suspensions/restrictions on outward remittances will be effective for six (06) months commencing from 2 July 2021.
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CCPI based Inflation increased to 5.2 per cent in June 2021
Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2013=100), increased to 5.2 per cent in June 2021 from 4.5 per cent in May 2021. This was driven by monthly increases of prices of items in both Food and Non-food categories. Accordingly, Food inflation (Y-o-Y) increased to 11.3 per cent in June 2021 from 9.9 per cent in May 2021, while Non-food inflation (Y-o-Y) increased to 2.5 per cent in June 2021 from 2.2 per cent in May 2021.
The CCPI, measured on an annual average basis, increased to 4.1 per cent in June 2021 from 3.9 per cent in May 2021.
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Statement by Deshamanya Professor W D Lakshman, Governor of the Central Bank of Sri Lanka on Foreign Currency Liquidity in the Domestic Market
Over the past few days, concerns have been raised by various individuals and media about an assumed shortage of foreign currency liquidity in the domestic market, preventing banks from facilitating imports. Reports published or circulated by some media channels indicate seriously negative viewpoints which can be very harmful to the country. I wish to make the following statement to explain the true position about this subject.
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NCPI based Inflation increased in May 2021
Headline inflation, as measured by the year-onyear (Y-o-Y) change in the National Consumer Price Index (NCPI, 2013=100)1 , increased to 6.1 per cent in May 2021 from 5.5 per cent in April 2021. This was mainly driven by the monthly increases in prices of items in both Food and Nonfood categories. Meanwhile, Food inflation (Y-oY) increased to 10.3 per cent in May 2021 from 9.7 per cent in April 2021 and Non-Food inflation (Y-o-Y) increased to 2.5 per cent in May 2021 from 2.2 per cent in April 2021.
The NCPI, measured on an annual average basis, increased marginally to 5.4 per cent in May 2021 from 5.3 per cent in April 2021.
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External Sector Performance - April 2021
Sri Lanka's external sector exhibited a mixed performance in April 2021. The deficit in the trade account widened for the second consecutive month in April 2021 compared to a year earlier while earnings from the tourism sector remained subdued. Notably, both exports and imports were significantly higher in April 2021, compared to April 2020, although both were lower compared to March 2021. However, workers' remittances continued its momentum, recording a significant growth in April 2021. Meanwhile, the financial account of the balance of payments strengthened during the month with the receipt of the proceeds of the syndicated loan facility from the China Development Bank. The Sri Lankan rupee remained broadly stable throughout the month, amidst some volatility observed in mid April.
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Sri Lanka Purchasing Managers’ Index - May 2021
Purchasing Managers' Indices for both Manufacturing and Services activities contracted in May.
Manufacturing activities contracted during May due to adverse impacts of the third wave of COVID-19 pandemic.
In line with the escalation of the third wave of COVID-19 pandemic, Services PMI dropped further to 39.5 in May 2021, recording the lowest reading since April 2020.
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Concessionary Scheme for Businesses and Individuals Affected by the third Wave of COVID-19
Considering the difficulties faced by the borrowers of Licensed Finance Companies and Specialised Leasing Companies [hereinafter referred to as Non-Banking Financial Institutions (NBFIs)], due to the third wave of COVID- 19 pandemic, the Central Bank of Sri Lanka (CBSL) issued circular No. 06 of 2021 on concessions for COVID-19 affected businesses and individuals, requesting NBFIs to provide concessions to affected borrowers as follows:
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Provision of Banking Services Amidst the COVID-19 Outbreak
The Central Bank of Sri Lanka (CBSL) upon obtaining approval/consent of the Director General of Health Services and the Inspector General of Police has already requested licensed commercial banks and licensed specialised banks (licensed banks) to carry out essential banking services, strictly adhering to all relevant safety measures and guidelines issued by the relevant authorities in providing banking services, under ongoing travel restrictions during the COVID-19 outbreak.
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Measures to Encourage Offshore Borrowings by Private Sector
The Central Bank of Sri Lanka (CBSL), with a view of encouraging foreign currency inflows to the country, invites the private sector to pursue avenues to raise offshore funding leveraging on its strengths, with the consent of the Hon. Minister of Finance and in line with provisions of the Foreign Exchange Act No. 12 of 2017 (FEA).
In this regard, to hedge the foreign exchange risk of offshore borrowing, a zero cost swap facility would be made available by CBSL for the private sector borrowers of foreign currency for the duration of the said borrowing, which may be reviewed and renewed annually.