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Appoinment of Mr Nihal Fonseka as a Member of the Monetary Board

Mr Anthony Nihal Fonseka has been appointed by His Excellency the President as a Member of the Monetary Board of the Central Bank of Sri Lanka with effect from July 27, 2016 in terms of Section 8(2)(c) of the Monetary Law Act.

Central Bank Releases Summary Trading Statistics on Government Securities Secondary Market Information for the First Time

As a further policy measure to develop the government securities market, the Central Bank from today has commenced releasing summary trading statistics on actual trading of government securities in the secondary market. From August 1, 2016, all primary dealers have been required to undertake inter-primary dealer trades in the trading platform arranged by the Central Bank through the Bloomberg which is a major international financial trading and information electronic platform. Further, all primary dealers will report all outright sales of government securities of value in excess of Rs. 50 mn to investors to this platform within 30 minutes of each transaction. Accordingly, the Central Bank will monitor these transactions on an on-going basis and summary of trading information consisting of yield rates and volume by each series of securities traded will be published in the Central Bank website in the format as annexed below. The Central Bank plans to release such information twice a day, at noon and close of the day, in due course when the reporting system is fully operative.

External Sector Performance - April 2016

Sri Lanka’s external sector recorded a modest performance in April 2016. The trade deficit narrowed on account of the higher decline in import expenditure mainly due to the drop in the importation of vehicles and rice, compared to the decline in earnings from exports during April 2016. Although workers’ remittances were marginally lower in April, earnings from tourism increased strengthening the current account of the Balance of Payments (BOP) while inflows to the financial account continued to moderate.

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Monetary Policy Review – July 2016

The increasing trend in both headline and core inflation continued, reflecting the rise in demand driven inflationary pressures in the economy. Supply side disruptions arising from adverse weather conditions and the revisions introduced to the tax structure by the government also contributed to the upward movement in inflation in the past two months. Meanwhile, in the real sector, the available indicators suggest a continuation of the growth momentum in economic activity. In particular, power generation, tourism and port related services, construction sector, investment goods imports as well as the purchasing managers’ indices (PMI) for manufacturing and services sectors have shown improvements over the past few months.

inflation in June 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 6.4 per cent in June 2016 from 5.3 per cent in May 2016, on year-on-year basis. Both Food and Non-food categories contributed towards the year-on-year inflation in June 2016.

The change in the NCPI measured on an annual average basis increased to 3.1 per cent in June 2016 from 2.7 per cent in May 2016.

SL Purchasing Managers’ Index Survey - June 2016

The Manufacturing PMI recovered to the positive territory in June 2016 registering 55.1 index points, from the contraction observed in the last two months, which is an increase of 7.2 index points from May 2016. This improvement was bolstered by the significant increase observed in Production and New Orders Indices. Moreover, all the Sub-indices of PMI, apart from Suppliers’ Delivery Time increased compared to the previous month. Overall data points to an expansion where all the sub-indices apart from the Employment Index are above the neutral 50.0 threshold. The expectations for activities also indicated an improvement for the next three months. On yearon-year basis, the PMI index witnesses a marginal drop of 2.4 index points compared to June 2015.

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