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External Sector Performance - August 2016

The external sector recorded a modest performance during August 2016 amidst the widening of the trade deficit while inflows from tourism and workers’ remittances grew at a healthy rate. Although exports recorded a considerable growth during August 2016, imports also grew resulting in a widening of the trade deficit. However, earnings from tourism and workers’ remittances grew, cushioning the impact of the trade deficit. Meanwhile, inflows to the financial account were supported by foreign investments to the government securities market and the Colombo Stock Exchange (CSE) and long-term loan inflows to the government in August 2016.

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The International Monetary Fund Releases the Second Tranche of US Dollars 162.6 million under the Extended Fund Facility

The first review of the three-year Extended Fund Facility (EFF) obtained by Sri Lanka has been successfully completed by the International Monetary Fund (IMF) and the second tranche to the value of SDR 119.894 million (approximately US dollars 162.6 million) has been disbursed on 18 November 2016.

The EFF aims at supporting the balance of payments and the broad economic reform agenda of the government. The IMF mission, that visited Sri Lanka in September, particularly welcomed the fiscal consolidation measures implemented by the Government and tightening of monetary policy, which has contributed to improved market confidence and an easing of pressures on the external sector. The mission appreciated the efforts of the government and other institutions in achieving all quantitative performance criteria through end-June. The members of the IMF Executive Board also have expressed their satisfaction on the achievements of Sri Lanka under the ongoing EFF programme.

Inflation in October 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, increased to 5.0 per cent in October 2016 from 4.7 per cent in September 2016, on year-on-year basis. Both Food and Non-food categories contributed towards the year-on-year inflation in October 2016.

The change in the NCPI measured on an annual average basis increased to 4.0 per cent in October 2016 from 3.8 per cent in September 2016.

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