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External Sector Performance - July 2018

Sri Lanka’s external sector recorded a moderate performance in July 2018. The trade deficit continued to widen in July 2018 (year-on-year) with higher import expenditure despite export earnings surpassing US dollars 1 billion during the month. Earnings from tourism recorded a modest growth while workers’ remittances declined marginally, on a year-on-year basis, during the month. The financial account recorded moderate inflows during July, while requirements of debt servicing and other outflows resulted in a decline in gross official reserves to US dollars 8.4 billion as at end July 2018. The foreign exchange market continued to be under pressure with outflows of foreign investments from the government securities market and increased foreign exchange demand for imports thus necessitating intervention by the Central Bank to curtail intraday excess volatility in the exchange rate.

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

The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 01 October 2018, decided to maintain policy interest rates at their current levels. Accordingly, the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank will remain at 7.25 per cent and 8.50 per cent, respectively.

The Board arrived at the above decision after carefully considering current and expected developments in the domestic and global economy, with the aim of stabilising inflation at midsingle digit levels in the medium term to support growth.

IMF Staff Concludes Visit to Sri Lanka to Discuss Progress of Economic Reform Program - September 27, 2018

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.