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IMF Staff Concludes Visit to Sri Lanka to Discuss Progress of Economic Program

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. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.

A staff team from the International Monetary Fund (IMF) led by Jaewoo Lee visited Colombo during September 13-23, 2016 to hold discussions on the first review of the Sri Lankan authorities’ economic program that is being supported by a three-year Extended Fund Facility (EFF). The program aims to support the authorities’ ambitious reform agenda to put public finances on a sustainable footing and create space for its social and development program. At the end of the visit Mr. Lee made the following statement:

The FIU Sri Lanka Entered into a Memorandum of Understanding with Suspicious Transaction Reporting Office of Singapore

The Financial Intelligence Unit of the Central Bank of Sri Lanka (FIU - Sri Lanka) entered into a Memorandum of Understanding (MOU) with the Suspicious Transaction Reporting Office of Singapore (STRO) on the basis of reciprocity and in the spirit of cooperation and mutual interest and within the framework of each Authority’s national legislation, to facilitate the exchange of information related to investigations and prosecutions of money laundering and terrorist financing on September 01, 2016. This MOU has been entered into by the FIU – Sri Lanka, in terms of the provisions of the Financial Transactions Reporting Act, No. 6 of 2006.

Inflation in August 2016

Inflation, as measured by the change in the National Consumer Price Index (NCPI) (2013=100), which is compiled by the Department of Census and Statistics, decreased to 4.5 per cent in August 2016 from 5.8 per cent in July 2016, on year-on-year basis. Both Food and Nonfood categories contributed towards the year-on-year inflation in August 2016.

The change in the NCPI measured on an annual average basis increased to 3.6 per cent in August 2016 from 3.4 per cent in July 2016.

Transparency in Government Securities Market further Improves

As the second stage, commercial banks joined the Bloomberg electronic bond trading platform for government securities secondary market transactions with effect from 15.09.2016. Prior to this, all primary dealers joined the platform on 01.08.2016. Therefore, now all primary dealers and banks undertake trades among them in the platform and report all over-the-counter outright deals with investors of Rs 50 mn and above within 30 minutes. The Central Bank releases basic trade information on yields and volumes by each security traded to its website next day. During 32 market days from 01.08.2016 to 15.09.2016, a number of 1,816 outright transactions amounting to Rs. 218.7 bn took place in trade of the majority of securities in issue. In due course, the Central Bank will release such market information twice a day, at noon and close of the day. Accordingly, all stakeholders have now begun to yield the benefits arising from the transparency, price discovery and liquidity created through this trading platform in the market.

Sri Lanka Purchasing Managers’ Index Survey - August 2016

The Manufacturing Sector PMI increased to 53.5 in August which is an increase of 2.9 index points from 50.6 in July 2016. The increase in August was fuelled by the improvements observed in New Orders, Employment and Production Indices. All the sub-indices of manufacturing sector PMI, apart from stock of purchases which was unchanged, increased compared to the previous month. Notably, New Orders, Employment and Suppliers’ Delivery Time indices recovered from the contraction observed in July. Overall data points to an expansion where all the sub-indices are above the neutral 50.0 threshold. The expectations for activities indicate an improvement for the next three months.

Release of 'A Step by Step Guide to Doing Business in Sri Lanka' and 'Sri Lanka Socio-Economic Data – 2016' Publications

The sixth edition of “A Step by Step Guide to Doing Business in Sri Lanka” has been now published by the Central Bank of Sri Lanka (CBSL). This publication contains useful regulatory information on starting, operating and closing a business enterprise in Sri Lanka. As proposed by the relevant institutions, the necessary amendments up to the first quarter of 2016 are incorporated into this edition.

This is a useful source document with all information in one place for the business community and foreign investors and will assist by reducing the search costs, time and inconvenience in accessing such information.

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