Business
Central Bank of Sri Lanka tightens monetary policy stance

Monetary Policy Review: No. 06 – August 2021
The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 18 August 2021, decided to increase the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 50 basis points each, to 5.00 per cent and 6.00 per cent, respectively. In addition, the Monetary Board decided to increase the Statutory Reserve Ratio (SRR) applicable on all rupee deposit liabilities of licensed commercial banks (LCBs) by 2.0 percentage points to 4.00 per cent, with effect from the reserve maintenance period commencing on 01 September 2021.
These decisions were made with a view to addressing the imbalances on the external sector of the economy and to preempt the buildup of any excessive inflationary pressures over the medium term, amidst improved growth prospects. The global economy is set to make a gradual recovery in 2021, although normalisation of economic activity would largely be uneven across regions As per the July 2021 update to the World Economic Outlook (WEO) of the International Monetary Fund (IMF), the global economy is projected to grow by 6.0 per cent in 2021 and 4.9 per cent in 2022. Economic prospects have diverged across regions and access to COVID-19 vaccines has emerged as the principal factor that drives the global economic recovery in the period ahead.
Most countries have experienced transitory price pressures due to supply-demand mismatches amidst the pandemic. Such transitory pressures could become more persistent, thereby warranting preemptive action by central banks in order to ensure stability in the period ahead. Accordingly, some central banks have already commenced tightening monetary policy while several others have signalled a possible tightening of monetary policy in the period ahead. The Sri Lankan economy is on a recovery path despite the pandemic related disruptions
Supported by fiscal and monetary stimulus measures, the Sri Lankan economy is gradually making headway following the setback in 2020. As per the estimates published by the Department of Census and Statistics (DCS), the economy witnessed a stronger than expected recovery during the first quarter of 2021, recording a real growth of 4.3 per cent, year-on-year. The economy is poised to record a higher growth rate during the second quarter of 2021, partly due to the sharp contraction observed in the corresponding quarter of the previous year. Possible disruptions to domestic economic activity from the re-emergence of the COVID-19 pandemic and related preventive measures could weaken the recovery to some extent during the second half of 2021. Nevertheless, with the successful rolling out of the national COVID-19 vaccination programme and the Government’s strategy to impose only selective mobility restrictions, the momentum of activity is expected to sustain in the period ahead. Available indicators and projections suggest that the real economy would grow over 5 per cent in 2021, and this momentum would be sustained over the medium term.
Most market interest rates have reached low levels resulting in the expected acceleration in credit flows to the private sector With the gradual transmission of accommodative monetary policy measures, most market deposit and lending interest rates declined to their historic low levels. Supported by the low interest rate environment, credit to the private sector expanded notably during the first half of 2021, surpassing the annual expansion of credit observed in 2019 and 2020. The momentum of credit expansion is expected to continue in the period ahead, with increased credit flows to productive and needy sectors of the economy. Meanwhile, credit obtained by the public sector from the banking system, particularly net credit to the Government, also increased notably thus far during the year, amidst the impact of the pandemic on government revenue and recurrent expenditure. Reflecting the impact of increased domestic credit, the growth of broad money (M2b) continued to remain elevated. The external sector continued to face a multitude of challenges requiring coordinated measures The implementation of the essential growth-conducive stimulus measures, which resulted in the availability of low cost credit to the private sector, led to a sustained increase in the demand for merchandise imports since mid-2020. With the increase in import expenditure outweighing the improvements observed in earnings from exports, the trade deficit continued to widen during the first half of 2021 over the corresponding period of last year. Moreover, the expected recovery in the tourism industry could be further delayed due to uncertainties associated with the resurgence of the pandemic globally. Workers’ remittances, which recorded a significant growth in 2020 as well as in the first few months of 2021, have also displayed some deceleration. Limited conversion by exporters and the advancing of imports together with some speculative activity, prompted by anomalies between interest rates on the rupee and foreign currency products in the financial market, exerted undue pressure on the exchange rate in the domestic market. Amidst these developments, all debt service obligations of the Government, including the settlement of the International Sovereign Bond (ISB) of US dollars 1 billion in late July 2021, have been duly met thus far in 2021. Gross official reserves were estimated at US dollars 2.8 billion with an import cover of 1.8 months by end July 2021. This, however, does not include the bilateral currency swap facility with the People’s Bank of China (PBoC) of CNY 10 billion (equivalent to approximately US dollars 1.5 billion). Measures are being taken by the Government and the Central Bank to secure foreign financing from several sources in order to reinforce the level of official reserves in the near future. Meanwhile, the Government continued to aggressively explore avenues to enhance non-debt creating foreign inflows, by strengthening the domestic production economy, which would help strengthen the external sector in the period ahead. Possible upside pressures on inflation are being addressed through preemptive policy measures Inflation, which remained moderate during early 2021, accelerated somewhat in recent months due to high food inflation and some acceleration in non-food inflation. Inflation is projected to hover around the upper bound of the desired 4-6 per cent target range in the near term. The envisaged improvements in aggregate demand conditions and the likely increases in global energy and other commodity prices may generate some inflationary pressures in 2022, requiring preemptive policy measures to ensure the maintenance of inflation in mid-single digit levels over the medium term.
Tightening of monetary policy stance is expected to support greater economic stability In consideration of the current and expected macroeconomic developments as highlighted above, the Monetary Board decided to rollback some extraordinary support provided to the economy at the onset of the COVID-19 pandemic. Accordingly, with effect from 19 August 2021, the Board decided to increase the policy interest rates, i.e., the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR), of the Central Bank by 50 basis points each, to 5.00 per cent and 6.00 per cent, respectively. This would also result in the Bank Rate, which is linked to the SLFR with a margin of +300 basis points, automatically adjusting to 9.00 per cent.
Business
Sri Lanka’s EWIS makes history: First homegrown laptops shipped to Zimbabwe

Company stresses ambition to surpass this milestone
Eyes markets across Africa and beyond
In a groundbreaking achievement for Sri Lanka’s IT and electronics manufacturing industry, EWIS Colombo Ltd, the country’s first and only local computer manufacturer, has successfully exported its first consignment of locally built laptops to Zimbabwe.
This landmark event not only positions Sri Lanka as an emerging force in global IT hardware manufacturing but also highlights EWIS’s commitment to innovation, quality, and excellence on the international stage.
This historic shipment, dispatched from EWIS’s state-of-the-art manufacturing facility in Samajasewapura, Sooriyawewa, underscores the company’s dedication to delivering world-class technology solutions. With over 11 years of expertise in manufacturing and assembly, EWIS Colombo Ltd has played a pivotal role in driving Sri Lanka’s ICT sector forward. As a Board of Investment (BOI) Section 17-approved company, EWIS has established the country’s first and only local computer manufacturing plant, paving the way for the nation’s growth in high-tech exports.
Speaking on this momentous achievement, Sanjeewa Wickramanayake, Chairman of EWIS Colombo Ltd, said: “This milestone is not just for EWIS but for Sri Lanka as a whole. It proves that our country has the talent, capability, and ambition to manufacture and export high-quality IT products, competing confidently on the global stage. As we continue expanding beyond local markets, we take immense pride in showcasing Sri Lanka’s excellence in technology and innovation to the world. EWIS’s commitment to world-class quality is reinforced by its ISO 9001:2015, ISO 14001:2015, CE, FCC, and RoHS certifications, ensuring compliance with international quality, safety, and environmental standards.”
Speaking further he said:
“For nearly four decades, EWIS has been a trailblazer in Sri Lanka’s ICT sector, delivering cutting-edge solutions for education, businesses, and government enterprises.
With over 11 years of local manufacturing and assembly expertise, EWIS has continuously refined its capabilities to produce high-quality, internationally competitive IT hardware. The successful export to Zimbabwe represents a bold step toward expanding EWIS’s global footprint, reinforcing Sri Lanka’s potential as a world-class technology and manufacturing hub.”
Business
Dialog Television and Emerging Media Introduce one-stop advertising solution

Dialog Television, Sri Lanka’s #1 Pay-TV service provider, has partnered with Emerging Media to enhance the convenience and effectiveness of advertising. This collaboration brings together Dialog Television’s world-class entertainment, featuring 18 advertisable channels across genres such as movies, edutainment, kids, music, sports, and local content, with Emerging Media’s expertise in digital advertising and targeted marketing. This synergy creates a seamless platform for businesses to maximize brand exposure across multiple channels.
With a reach of over 1.7 million households, Dialog Television provides advertisers with a powerful avenue to engage diverse audiences. Brands can place advertisements on leading international and local channels such as &flix, Star Movies, TLC, Animal Planet, AXN, Zee Café, Comedy Central, Star Plus, A+, Nickelodeon, Star Vijay, Zee Tamil, Star Sports, Ten Cricket, Sony SIX, ThePapare TV, Channel One, Citi Hitz and Channel C. Through this partnership, Emerging Media will facilitate advertising sales, allowing businesses to target specific viewer segments while simplifying the media buying process with a single point of contact.
Commenting on the partnership, Lim Li San, Group Chief Operating Officer at Dialog Axiata PLC, stated, “As Sri Lanka’s premier Pay-TV service provider, we serve more than 1.7 million households with over 6 million pairs of captive eyeballs across Sri Lanka. Today, we are excited to embark on this partnership with Emerging Media to avail our Dialog Television platform and brand strength to provide quality advertisement exposure and customer engagement to local businesses across Sri Lanka.”
Business
IIHS partners with University of Surrey to transform healthcare education

The International Institute of Health Sciences (IIHS), a pioneer in healthcare training for over 23 years, has partnered with the University of Surrey, UK, to revolutionise healthcare education in Sri Lanka and the broader South Asian region. This will create a world-class academic pathway for aspiring nursing and healthcare professionals, as well as young individuals seeking careers in the field. Under this agreement, IIHS and the University of Surrey will introduce a series of academic initiatives to enhance healthcare training and accessibility.
These include delivering internationally recognised nursing programmes that allow Sri Lankan and regional students to earn globally competitive qualifications in Sri Lanka.
Commenting on the move, Dr. Kithsiri Edirisinghe, CEO & Dean of Undergraduate Studies at IIHS, said: “This MOU marks a significant step in our mission to deliver world-class healthcare education to Sri Lanka and the region. IIHS remains dedicated to shaping the future of healthcare professionals and fostering global healthcare leadership.” Dr. Shelini Surendran, Associate Dean (International) at the University of Surrey, emphasised: “Sri Lanka is establishing itself as a regional education hub, and this partnership ensures students across Asia can access top-tier UK healthcare education at IIHS. By bridging academic excellence with accessibility, we provide students with a clear pathway to their professional goals.”
-
Foreign News2 days ago
Search continues in Dominican Republic for missing student Sudiksha Konanki
-
News5 days ago
Alfred Duraiappa’s relative killed in Canada shooting
-
Features4 days ago
Richard de Zoysa at 67
-
Editorial6 days ago
Ghosts refusing to fade away
-
Midweek Review5 days ago
Ranil in Head-to-Head controversy
-
Features4 days ago
SL Navy helping save kidneys
-
Features6 days ago
The Gypsies…one year at a time
-
Latest News3 days ago
Debutant Madara, Athapaththu fashion Sri Lanka women’s first T20I win in New Zealand