• World Bank Approves $150 Million to Strengthen Sri Lanka’s Financial Sector Safety Net

    The World Bank Executive Board approved US$ 150 Million under the Sri Lanka Financial Sector Safety Net Strengthening Project to strengthen the financial and institutional capacity of Sri Lanka’s financial sector safety net, with the focus on the Sri Lanka Deposit Insurance Scheme. The World Bank issued the following press release on 09 November 2023.

    WASHINGTON, November 9, 2023—The World Bank’s Board of Executive Directors today approved $150 million in financing for Sri Lanka to strengthen the resilience of the financial sector.

  • CCPI based headline inflation edged up slightly in October 2023

    Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2021=100)1 increased to 1.5% in October 2023 from 1.3% in September 2023. This slight increase in the headline inflation is mostly in line with the projections envisaged by the Central Bank of Sri Lanka (CBSL) in October 2023.

  • Sri Lanka Purchasing Managers’ Index (Construction) - September 2023

    Construction PMI recorded a Total Activity Index value of 44.3 in September 2023, indicating the continued contraction in constructon activities. In addition to the continuous decline in project work, the persistent rain that prevailed during the month dampened the progress of the available construction activities as well.

  • External Sector Performance – September 2023

    Merchandise trade deficit widened in September 2023 due to the combined impact of relatively low export earnings and high import expenditure, compared to September 2022. The cumulative trade deficit during January to September 2023 continued to remain significantly low. 

    Workers’ remittances and earnings from tourism recorded significant improvements in September 2023, compared to the corresponding period of the previous year. 

    Tourist arrivals recorded over one million during the nine months of ending September 2023.

    Foreign investments in the government securities market recorded a lower net outflow during September 2023, compared to the previous months.

    Gross Official Reserves amounted to US dollars 3.5 billion by end September 2023.

    The Sri Lanka rupee exhibited some volatility against the US dollar during the month of September 2023.

  • Central Bank of Sri Lanka Co-hosted the 4th CBSL-ADBI-APAEA Joint Workshop

    The Central Bank of Sri Lanka co-hosted the CBSL-ADBI-APAEA Workshop for the fourth consecutive year, in collaboration with the Asian Development Bank Institute (ADBI) and the Asia-Pacific Applied Economics Association (APAEA), on 27 October 2023 at the John Exter International Conference Hall of the Central Bank. This year’s conference was held under the theme of ‘Monetary Policy and Central Banking Issues in Asia and the Pacific’.

  • IMF Reaches Staff-Level Agreement on the First Review of Sri Lanka’s Extended Fund Facility Arrangement

    IMF staff and the Sri Lankan authorities have reached a staff-level agreement on economic policies to conclude the first review of the 48-month EFF-supported program. Sri Lanka will have access to SDR 254 million (about US$330 million) in financing once the review is approved by IMF Management and IMF Executive Board.

    Macroeconomic policy reforms are starting to bear fruit and the economy is showing tentative signs of stabilization. Sustaining the reform momentum and addressing governance weaknesses and corruption vulnerabilities are critical to put the economy on a path towards lasting recovery and stable and inclusive growth.

    Completion of the review by the IMF’s Executive Board requires: (i) the implementation by the authorities of all prior actions; and (ii) the completion of financing assurances reviews.

  • Imposition/ Collection of Administrative Penalties by the Financial Intelligence Unit (FIU) to Enforce Compliance on Financial Institutions from 01 April 2023 to 26 September 2023

    By virtue of the powers vested under Section 19 (1) read together with section 19 (2) of the Financial Transactions Reporting Act, No. 6 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. 1.7 million in total from 01 April 2023 to 26 September 2023 to enforce compliance on Financial Institutions. The money collected as penalties were credited to the Consolidated Fund.

  • Sri Lanka Purchasing Managers’ Index (Manufacturing and Services) - September 2023

    Purchasing Managers Indices in September 2023 indicated a contraction in Manufacturing activities and an expansion in Services activities.

    Manufacturing PMI recorded an index value of 45.7 in September 2023, indicating a contraction in manufacturing activities. This setback was contributed by the subdued performance observed in all the sub-indices.

    Services sector PMI recorded an index value of 54.7 in September 2023, indicating an expansion in the services activities at a slower pace compared to the previous month. This was led by the increases observed in New Businesses, Business Activities, Employment and Expectations for Activity. Nevertheless, Backlogs of Works remained contracted during the month.

  • The Central Bank of Sri Lanka further reduces policy interest rates

    The first monetary policy review by the Monetary Policy Board under the Central Bank of Sri Lanka Act, No. 16 of 2023 (CBA) was held on 04 October 2023. In this review, the Board decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 100 basis points (bps) to 10.00 per cent and 11.00 per cent, respectively. The Board arrived at this decision following a careful analysis of the current and expected developments, including low inflation and benign inflation expectations in the domestic economy, with the aim of stabilising inflation at the envisaged 5 per cent level in the medium term, thereby enabling the economy to reach its potential growth. The Board expects that this reduction of policy interest rates, along with the significant easing of monetary policy effected previously, including the directions issued by the Central Bank to licensed banks to reduce interest rates, and the significant reduction of risk premia on government securities, would accelerate the downward adjustment in market interest rates, particularly lending rates, in the period ahead. The financial sector is urged to pass on the benefits of the continued easing of monetary conditions to individuals and businesses adequately and swiftly, thereby supporting the envisaged rebound of the economy.

  • External Sector Performance – August 2023

    The merchandise trade deficit widened in August 2023 compared to a year ago led by higher decline in export earnings than the decline in import expenditure. However, both export earnings and import expenditure increased compared to July 2023. 

    Both workers’ remittances and earnings from tourism recorded notable improvements in August 2023 compared to the previous year.

    In August 2023, foreign investment in the government securities market recorded a net outflow, while foreign investment to the Colombo Stock Exchange recorded a net foreign inflow in August 2023.

Pages