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The Central Bank of Sri Lanka Maintains Policy Interest Rates at their Current Levels

The Monetary Policy Board of the Central Bank of Sri Lanka, at its meeting held on 27 May 2024, 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 8.50 per cent and 9.50 per cent, respectively. The Board arrived at this decision after carefully assessing the current and expected macroeconomic developments and possible risks on the domestic and global fronts with a view to maintaining inflation at the targeted level of 5 per cent over the medium term while supporting the economy to reach its potential. While the medium term inflation outlook remains compatible with the current level of policy interest rates and inflation expectations are well anchored, the Board observed the need for a further reduction in market lending interest rates in line with policy interest rates and other benchmark interest rates, which is imperative for the easing of domestic monetary conditions and domestic economic recovery.

Central Bank Launches Financial Literacy Roadmap of Sri Lanka 2024-2028

Today, on May 21, 2024, the Central Bank of Sri Lanka launched the Financial Literacy Roadmap of Sri Lanka, marking a significant step towards enhancing the financial capabilities of Sri Lankans. This Roadmap, a cornerstone of Sri Lanka's National Financial Inclusion Strategy (NFIS), offers evidence-based guidance to all stakeholders engaged in financial literacy initiatives, aligning them towards a common objective: improving the financial behaviour of Sri Lankans and bolstering their financial resilience. Developed through collaborative efforts among various stakeholders, led by the Central Bank through the NFIS Secretariat under the Regional Development Department, the Roadmap sets out to foster financial inclusion, enhance consumer protection, and fortify financial stability.

Sri Lanka Purchasing Managers’ Index (Manufacturing and Services) - April 2024

Purchasing Managers’ Indices indicate a contraction in Manufacturing activities and an expansion in Services activities in April 2024

Sri Lanka Purchasing Managers’ Index for Manufacturing (PMI – Manufacturing) recorded an index value of 42.0 in April 2024, indicating a contraction in manufacturing activities following the seasonal pattern. New Orders, Production, Employment and Stock of Purchases sub-indices declined during the month, resulting in an overall decline in the index.

Sri Lanka Purchasing Managers’ Index for Services (PMI – Services) indicated a slower expansion in services activities in April 2024 as reflected by the Business Activity Index, which recorded an index value of 56.7.

Public Consultation on Amendments to the Finance Leasing Act, No.56 of 2000 (as amended) (FLA)

Having recognized the need for strengthening the protection of finance leasing customers and updating the FLA to be in line with the industry developments, the Central Bank of Sri Lanka (CBSL) has initiated amending the FLA.

To have wider stakeholder consultation, the CBSL is inviting the general public to submit observations/ suggestions/ comments on the draft amendments. The public can access the draft amendments though the following weblink at the CBSL website;

External Sector Performance - March 2024

The merchandise trade deficit narrowed in March 2024, (year-on-year), supported by a notable improvement in export earnings, the highest earnings recorded since August 2022.

The services sector also recorded a notable net inflow in March 2024 mainly from tourism, while sizeable inflows were recorded in terms of sea transport (freight) services as well.

Workers’ remittances remained elevated in March 2024 in line with the seasonal trend.

Foreign investments in the Colombo Stock Exchange (CSE) and the government securities market recorded monthly net outflows in March 2024.

Gross Official Reserves stood at US dollars 5.0 billion by end March 2024, a notable increase compared to the US dollars 4.4 billion as at end 2023.

The Sri Lanka rupee demonstrated a notable appreciation trend against the US dollar during the month of March 2024.

CCPI based headline inflation showed some uptick in April 2024

Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2021=100)1 showed some uptick to record 1.5% in April 2024 compared to 0.9% in March 2024.

Food inflation (Y-o-Y) decelerated to 2.9% in April 2024 from 3.8% in March 2024. Nevertheless, Non-Food Category recorded an inflation (Y-o-Y) of 0.9% in April 2024 compared to the 0.5% deflation observed in March 2024. On a month-on-month basis, inflation continued to decline. Monthly change of CCPI recorded -0.79% in April 2024 due to the price decreases of 0.32% observed in the items of Food category and the price decreases of 0.47% observed in the items of Non-Food category. Meanwhile, core inflation (Y-o-Y), which reflects the underlying inflation trends in the economy,  accelerated to 3.4% in April 2024 from 3.1% in March 2024.