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The Central Bank Expresses its Strong Objection to the Contents of the Statement Released by Fitch Ratings

The Central Bank of Sri Lanka strongly objects to the statement released by Fitch Ratings on 21 November 2019 titled “Sri Lanka Election Result Increases Policy Uncertainty”, as it depicts the complete opposite of the realised positive market response to the outcome of the Presidential elections, followed by the assumption of duties by His Excellency the President and ongoing key appointments. 

External Sector Performance - September 2019

The trade deficit widened in September 2019 (year-on-year), with the decline in earnings from exports exceeding the decline in expenditure on imports. Nevertheless, the trade deficit remained significantly low in the first nine months of 2019 over the same period of last year, as a result of increased cumulative earnings from exports and a sharp decline in cumulative expenditure on imports. Meanwhile, the drop in tourist arrivals was contained further in September 2019. Workers’ remittances rose (year-on-year) in September 2019, although declining on a cumulative basis. In the financial account, foreign investment in the CSE and the government securities market recorded net outflows in September 2019. Despite some depreciation pressure in the month of September, the Sri Lankan rupee remained appreciated against most major currencies during the first nine months of the year.

Sri Lanka Purchasing Managers’ Index - October 2019

Manufacturing PMI increased to 57.6 index value in October 2019 mainly due to increase in Production and New Orders compared to September 2019.

The increase in Production and New Orders was observed especially in manufacturing of food and beverages sector to meet the upcoming festive season demand. Meanwhile, Employment also increased in manufacturing of food & beverages and wearing apparel sectors. This was mainly due to the recruitment of new employees to increase the production levels to meet the higher demand in the period ahead.

Although the New Orders and Production expanded at a higher rate, the Stock of purchases remained broadly unchanged due to accumulated stocks brought forward from previous months.Further, Suppliers' Delivery Time lengthened at a slightly higher rate.

All sub-indices of PMI Manufacturing exceeded the threshold of 50.0 (neutral) signalling an overall expansion in manufacturing activities during the period under review.

Sri Lanka Prosperity Index - 2018

Sri Lanka Prosperity Index (SLPI), increased to 0.783 in 2018 from 0.548 recorded in 2017. All three sub-indices of SLPI, namely ‘Economy and Business Climate’, ‘Well-being of the People’ and ‘Socio-Economic Infrastructure’ contributed to this increase.

Economy and Business Climate sub-index improved mainly due to price stability and increase in informal sector wages during 2018. With regard to the sub-index of Well-being of the People, major improvements were recorded in the aspects of health facilitation, quality of education, wealth of people and purity of the environment. Socio-Economic Infrastructure sub-index also increased slightly during 2018 mainly due to the improvements in availability of electricity, transportation, and Information and Communication Technology (ICT) facilities and pipe borne water quality.