Sri Lanka’s external sector performance continued to improve in the month of December 2017, mainly with higher inflows to the Financial Account of the Balance of Payments (BOP). Although earnings from exports increased at a higher rate, the increase in import expenditure resulted in widening the trade deficit in December 2017. Continued inflows by way of tourist earnings and workers’ remittances, however, have contributed in curtailing the expanded trade deficit to a certain extent. Improvement in short-term and long-term capital inflows continued during the month. Reflecting the favourable developments in the external sector, the BOP recorded a surplus of US dollars 2,068 million in 2017, while gross official reserves of the country stood at US dollars 8.0 billion as at end 2017. Meanwhile, the Sri Lankan rupee depreciated by 2.0 per cent during 2017.

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The Financial Action Task Force (FATF), the global policy setter has introduced 40 recommendations on Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) in order to combat money laundering/ terrorist financing and other related offences globally.  The Asia Pacific Group on Money Laundering (APG) functions as the FATF’s regional affiliated body and monitors the level of compliance with the FATF recommendations in the region. Sri Lanka is a founding member of APG.  

The FATF evaluates legal, institutional framework and effective implementation of AML/CFT measures of countries regularly through regional monitoring bodies. Sri Lanka was subjected to its 1st Mutual Evaluation (ME) by APG in 2006 and the 2nd ME during 2014/15. The 2nd Mutual Evaluation Report (MER) on Sri Lanka which was adopted in July, 2015, recommended Sri Lanka to initiate a number of actions to rectify the AML/CFT deficiencies identified during the ME.