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External Sector Performance - March 2023

The trade deficit continued to remain modest in March 2023, compared to a year ago, though it widened notably compared to February 2023

Workers’ remittances and earnings from tourism recorded a notable improvement in March 2023

The exchange rate appreciated notably in March 2023 supported by improved market sentiments towards the finalisation of the IMF-EFF arrangement and improvements in liquidity conditions in the domestic foreign exchange market driven by policy relaxation allowed by the Central Bank

The Central Bank of Sri Lanka Releases its Annual Report for the Year 2022

In terms of Section 35 of the Monetary Law Act No. 58 of 1949, the seventy third Annual Report of the Monetary Board of the Central Bank of Sri Lanka was presented today (27 April 2023) to Hon. Ranil Wickremesinghe, the President and Minister of Finance, Economic Stabilization and National Policies, by Dr. P Nandalal Weerasinghe, the Governor of the Central Bank of Sri Lanka.

Shortage of a Cash Bundle

A shortage of a cash bundle worth Rs 5 million (Rs 5000 denomination) was discovered in a Vault of the Central Bank during the currency operations on 11.04.2023. An internal probe into the matter was commenced immediately, while a complaint was also lodged at the Fort Police Station. The police investigation is in progress. The Central Bank is taking necessary measures to thoroughly investigate the incident and strengthen the internal controls, processes, etc. It will also continue assisting the Police to carry out its investigations. 

SL Purchasing Managers’ Index (PMI) – March 2023

Purchasing Managers’ Indices for both Manufacturing and Services activities returned to positive territory in March 2023.

Manufacturing PMI turned positive in March 2023, after nine consecutive survey rounds, recording an index value of 51.4. This month-on-month expansion was driven by the increase in New Orders and Production sub-indices mainly due to the seasonal demand. However, Employment, Stock of Purchases and Suppliers' Delivery Time sub-indices remained below the neutral threshold. 

The Central Bank Clarifies Misreporting of the Views Expressed by Governor of the Central Bank on the Economic Outlook

The Central Bank of Sri Lanka wishes to clarify a misreporting of the views expressed by Governor of the Central Bank following a recent media engagement. Such media reports claim that ‘Governor anticipates a difficult period ahead in the economy’. This is a gross misinterpretation of the views expressed by Governor, taken out of the context of the discussion on challenges that the economy could face in the period ahead if the envisaged reforms are delayed or derailed. Governor viewed that the difficult and painful policy measures implemented by the Government and the Central Bank thus far have helped to stabilise the economic conditions, compared to the unprecedented socio-economic tensions witnessed in 2022. Despite these reforms have resulted in significant adjustment costs, causing hardship to the people and businesses in the near term, they were necessary to restore stability, which will accrue benefits to the people and businesses in the period ahead.

Monetary Policy Review - No. 3 of 2023

The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 04 April 2023, 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 15.50 per cent and 16.50 per cent, respectively. Having considered the recent and expected economic developments, and macroeconomic projections on domestic and global fronts, the Board viewed that the maintenance of the prevailing tight monetary policy stance is necessary to ensure that monetary conditions remain sufficiently tight to facilitate the continuation of the ongoing disinflation process amidst the improvements in market sentiments following the finalisation of the Extended Fund Facility (EFF) from the International Monetary Fund (IMF) and the downward shift in elevated market interest rates reflecting the falling risk premia.