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IMF Executive Board Completes the Sixth Review of Sri Lanka’s Extended Arrangement under the Extended Fund Facility

Sri Lanka successfully completed the sixth review, enabling the next disbursement of supporting funds.

Sustaining policy discipline remains critical to strengthen resilience and support strong and inclusive growth.

Mobilizing revenue will be central to place public debt on a downward path while preserving space for social and investment spending.

On November 1, 2019, the Executive Board of the International Monetary Fund (IMF) completed the Sixth Review of Sri Lanka’s economic performance under the program supported by an extended arrangement under the Extended Fund Facility (EFF). The completion of the Sixth review, upon the granting of a waiver of non-observance for the end-June 2019 performance criterion on the primary balance, enables the disbursement of SDR 118.5 million (about US$164 million), bringing total disbursements under the arrangement to SDR 952.23 million (about US$1.31 billion).

Regulatory actions taken by the Central Bank of Sri Lanka on The Finance Company PLC

The Finance Company PLC (TFC), a Finance Company licensed under the Finance Business Act No. 42 of 2011 (FBA) was severely impacted by the failure of a number of financial institutions within the Ceylinco Group in 2008. Since then the financial status of the company deteriorated gradually, leading to a severe liquidity crisis. Although, several efforts were made to identify prospective investors and to restructure the company, such efforts have not materialized to a satisfactory level yet.

Inflation increased in September 2019

Headline inflation as measured by the year-on-year change in the National Consumer Price Index (NCPI, 2013=100)  increased to 5.0 per cent in September 2019 from 3.4 per cent in August 2019. The monthly increases of prices of items in both Food and Non-food categories contributed to this increase as reflected in year-on-year Food and Non-food inflation recording 4.9 per cent and 5.1 per cent respectively in September 2019. In addition, the low base that prevailed in the corresponding month of the previous year also contributed for this increase.

The Financial Action Task Force delisted Sri Lanka from the Grey List

The Financial Action Task Force (FATF), the global policy setter on Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT), has delisted Sri Lanka from FATF’s Compliance Document which is more commonly identified as “the Grey List”. The decision was taken at the FATF Plenary held during 13-18 October 2019 in Paris.

Financial Intelligence Unit of Sri Lanka Entered into an Agreement with INTERPOL National Central Bureau for Sri Lanka

In terms of the provisions of the Financial Transactions Reporting Act, No. 6 of 2006 (FTRA), the Financial Intelligence Unit (FIU) of Sri Lanka entered into an agreement with INTERPOL National Central Bureau for Sri Lanka (NCB Colombo) on October 11, 2019 at the Central Bank of Sri Lanka to obtain direct access to the INTERPOL Information System.

Senior Deputy Inspector General of Police, Head of NCB Colombo, Mr. D W R B Seneviratne and Mr. D M Rupasinghe, Director, FIU signed the agreement on behalf of the respective institutions in the presence of Dr. Indrajit Coomaraswamy, the Governor of the Central Bank of Sri Lanka, who is also the Chairman of the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) National Coordinating Committee and Mr. C D Wickramaratne, Acting Inspector General of Police.

Sri Lanka Purchasing Managers’ Index - September 2019

Manufacturing activities expanded at a slower rate in September 2019, recording an index value of 54.7 which is a decrease of 1.9 index points, compared to August 2019. This slowdown in manufacturing PMI was mainly driven by the slowdown in Production and New Orders during the month of September. Slowdown in Production could be observed, especially in manufacturing of food & beverages and textiles & wearing apparel sectors. Although the New Orders and Production expanded at a slower rate, the Stock of Purchases was increased significantly with the anticipation of high demand in future especially in manufacturing of food & beverages sector.

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