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External Sector Performance - November 2015

The trade deficit contracted in November 2015 compared to the corresponding month of 2014 due to the decline in import expenditure at a higher rate than the reduction in export earnings. Tourist earnings continued to increase, but the growth in workers’ remittances moderated. Inflows to the financial account strengthened with the proceeds from the latest International Sovereign Bond of US dollars 1,500 million.

Appointment of a New Deputy Governor

The Monetary Board, with the concurrence of the Hon. Minister of Finance, has promoted Assistant Governor, Mr. S Lankathilake to the post of Deputy Governor of the Central Bank of Sri Lanka (CBSL) with effect from 24th January 2016.

Monetary Policy Review - January 2016

Broad money supply (M2b) continued to expand at a high rate with a year-on-year growth of 17.2 per cent in November 2015, following the growth of 17.0 per cent in the previous month. In November 2015, the net foreign assets (NFA) of the banking sector improved with the receipt of the proceeds of the International Sovereign Bond (ISB) of US dollars 1.5 billion issued on 27 October 2015. The issuance of the ISB also facilitated a reduction of net credit obtained by the government (NCG) from the banking sector during the month of November, while credit obtained by public corporations also declined. Meanwhile, credit extended to the private sector by commercial banks remained the key driver of broad money growth, recording an increase of 27.0 per cent (year-on-year) in November 2015, compared to the growth of 26.3 per cent in October. In absolute terms, the monthly increase in private sector credit was Rs. 91.2 billion, leading to a cumulative expansion in private sector credit of Rs. 647.7 billion during the first eleven months of 2015.

Inflation in December 2015

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 4.2 per cent in December 2015 from 4.8 per cent in November 2015, on an year-on-year basis. Inflation on an annual average basis in December 2015 was 3.8 per cent.

Central Bank opens its Regional Office in Nuwara Eliya

The Central Bank of Sri Lanka will commence operations at its Regional Office in Nuwara Eliya on 17 January 2016 to further expand its regional presence to promote financial inclusion and to facilitate economic activities in the region. The Nuwara Eliya Regional Office is to be declared open by Mr. Arjuna Mahendran, the Governor of the Central Bank of Sri Lanka, with the participation of the senior management of the Central Bank and senior officials of commercial banks and government institutions.

External Sector Performance - October 2015

Sri Lanka’s external sector reflected a modest performance in the month of October 2015 with lower trade deficit, continued growth in tourist earnings and a moderate increase in workers’ remittances. Despite the slowdown in imports during the recent months, the cumulative trade deficit as at end October 2015 increased by 2.5 per cent mainly due to the subdued export performance as a result of depressed global demand. As at end October 2015, gross official reserves stood at US dollars 6.5 billion, and increased to US dollars 7.3 billion in November 2015 with the receipt of the proceeds of the 9th international sovereign bond issuance and other currency inflows.