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Central Bank Approved Rs. 28 Billion Loans at 4% among 13,861 Businesses Affected by the COVID-19 Outbreak

Having identified the urgent need of reviving the businesses adversely affected by the COVID-19 outbreak and thereby to promote economic activity in the country, the Central Bank and the Government of Sri Lanka launched a novel refinance facility under the Saubagya (Prosperity) Loan Scheme, named Saubagya Covid-19 Renaissance Facility, as announced on 24 March 2020.

NCPI based Inflation decreased further in May 2020

Headline inflation as measured by the year-on-year (Y-o-Y) change in the National Consumer Price Index (NCPI, 2013=100) decreased further to 5.2 per cent in May 2020 from 5.9 per cent in April 2020. This was mainly driven by the statistical effect of the high base prevailed in May 2019. Meanwhile, Food inflation (Y-o-Y) declined to 11.1 per cent in May 2020 from 12.2 per cent in April 2020 and Non-food inflation (Y-o-Y) also declined to 0.8 per cent in May 2020 from 1.1 per cent in April 2020.

External Sector Performance - April 2020

Sri Lanka’s external sector performance in April 2020 was severely affected by the COVID-19 pandemic related economic interruptions. The imposition of a partial lockdown had a significant impact on Sri Lanka’s merchandise exports sector while shutting down the tourism industry in April 2020. The expenditure on merchandise imports also declined, with disruption to import related supply chains and restrictions imposed on non essential imports by the government and the Central Bank. With some migrant workers returning to the country prior to the lockdown and reduced compensation and redundancies faced by some migrant workers abroad, a significant decline was recorded in workers’ remittances during the month. In the financial account, a net foreign investment outflow was recorded in the government securities market, while the Colombo Stock Exchange (CSE) remained closed throughout April 2020. With increased uncertainties and lack of inflows to the domestic foreign exchange market, the Sri Lanka rupee depreciated significantly against the US dollar during the first half of April 2020.

The Central Bank of Sri Lanka Implements New Credit Schemes to Support the Revival of the Economy

Growth of the Sri Lankan economy has fallen to dismal levels over the past few years, and the impact of the COVID-19 pandemic may result in severe stress on economic and financial system stability in the period ahead unless immediate remedial actions are taken. In this context, in support of the government’s efforts to revive the economy, the Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 16 June 2020, decided to introduce new credit schemes under the Section 83 of the Monetary Law Act No. 58 of 1949.