The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 07 July 2021, decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank at their current levels of 4.50 per cent and 5.50 per cent, respectively. The Board arrived at this decision after carefully considering the macroeconomic conditions and expected developments on the domestic and global fronts.
The Sri Lankan economy is likely to have recorded a higher than expected growth rate in the first quarter of 2021
Although GDP estimates for the first quarter of 2021 have not been released by the Department of Census and Statistics, indicators for several key sectors of the economy point towards a stronger than expected recovery during the quarter. Disturbances to domestic economic activity due to the third wave of the COVID-19 pandemic and related preventive measures weakened the recovery somewhat, in the second quarter of 2021. Nevertheless, the ongoing vaccination drive throughout the country and the likely removal of mobility restrictions are expected to ease the impact of the current wave of COVID-19 on overall economic activity, thereby facilitating a sustained economic recovery towards achieving a GDP growth rate of around 5 per cent in 2021. Along with the expected recovery in the global economy and the improvements on the domestic front, the upward momentum of economic activity is envisaged to sustain over the medium term.
The external sector is expected to gradually recover in the period ahead
In spite of the resilience shown by merchandise exports, the trade deficit widened during the period from January to May 2021, over the same period last year. Challenges emanating from multiple waves of COVID-19 globally and domestically continued to stifle the recovery of the tourism industry. On the other hand, the notable improvement in workers’ remittances continued to provide support for the external current account. While the measures introduced to address challenges in the external sector have helped ease the domestic foreign exchange market conditions to some extent, speculative behaviour and frontloading of imports have caused undue pressures in the market. The exchange rate has recorded a depreciation of 6.7 per cent against the US dollar thus far during the year. As of end June 2021, the gross official reserves were estimated at US dollars 4.0 billion (equivalent to 2.7 months of imports). This 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). Although the level of foreign reserves could experience some variations in the period ahead, such developments are expected to be temporary, with the adequate financing strategies lined up to
Economic Research Department 08.07.2021 2 maintain reserves at sufficient levels and to meet all maturing debt servicing obligations of the Government on time.
Market interest rates remain low, facilitating increased credit flows to the private sector
In response to the monetary policy easing measures adopted by the Central Bank, most market deposit and lending interest rates have declined to their historic low levels. Prevailing low interest rates and the surplus rupee liquidity in the domestic money market enabled the flow of low cost credit to the economy, thus supporting the revival of economic activity. Accordingly, credit extended to the private sector expanded notably during the period from January to May 2021, and this momentum is expected to sustain through 2021. The Central Bank expects domestic investors to make use of the low interest rate environment to expand their productive economic activities and explore new opportunities that are being created in the economy aimed at local and international markets. Meanwhile, credit obtained by the public sector from the banking system, particularly the Government, also increased notably, amidst the impact of the pandemic on government revenue and recurrent expenditure. With the significant expansion in domestic credit, the growth of broad money (M2b) remained elevated by end May 2021.
Any buildup of sustained inflationary pressures will be addressed through appropriate measures over the medium term
Inflation remains moderate, given the subdued aggregate demand conditions, although food inflation has accelerated due to supply-side disruptions. Inflation is expected to remain broadly within the desired 4-6 per cent range during the remainder of 2021. The envisaged improvements in aggregate demand conditions stemming from the effects of the stimulus measures adopted by the Central Bank and the Government and the likely increases in global commodity prices, may generate some inflationary pressures over the medium term. Such pressures will be mitigated through timely policy intervention by the Central Bank, thereby ensuring the maintenance of inflation in mid-single digit levels over the medium term.
Policy rates are maintained at current levels
In consideration of the current and expected macroeconomic developments highlighted above, the Monetary Board decided to maintain the policy interest rates, i.e., Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank, at their current levels of 4.50 per cent and 5.50 per cent, respectively. The Central Bank will continue to monitor domestic and global macroeconomic and financial market developments and stand ready to take appropriate measures, as and when necessary, with the aim of maintaining inflation in the targeted 4-6 per cent range under the flexible inflation targeting framework in the medium term, while supporting sustained economic recovery.
Monetary Policy Decision:
and SRR unchanged
Standing Deposit Facility Rate (SDFR) 4.50%
Standing Lending Facility Rate (SLFR) 5.50%
Bank Rate 8.50%
Statutory Reserve Ratio (SRR) 2.00%
Altair on track
`Altair’, the iconic building in Colombo – Sri Lanka is designed by Celebrity Architect Moshe Safdie based in Boston, USA. Moshe Safdie has designed many famous iconic structures including the famous Marina Bay Sands with Sky Garden in Singapore. `Altair’ is in the league of iconic buildings of the world, such as Burj Khalifa, Petronas Tower, Marina Bay Sands, Shanghai Tower, The Parc 1 Tower in Seoul – South Korea, ICC Building & Bank of China Tower in Hong Kong to name a few.
The project `Altair’ was launched by South City Group in Colombo in the year 2013. Due to construction related complications, force majeure reasons and an unfortunate ownership related dispute, the project has been delayed. However, South City Group has expressed with much pleasure that the Group is back in the helm of the real estate project with 100% control. Most importantly, the project is progressing well and will be ready for handing over in the next few months.
The spokesperson of South City stated that that they are getting utmost support and cooperation from the Government of Sri Lanka for completing the project. President Gotabaya Rajapaksa has appointed Mr. Sirinimal Perera, the Special Authorised Officer to steer the project towards its successful completion. South City group is also receiving steadfast backing from the esteemed customers and the project is on track to deliver what it promised since inception. The rich experience of South City Management with a huge knowledge bank will be able to soon create another landmark in Sri Lanka which will be one of the top landmarks in the world.
Altair’ is an architectural marvel and consists of two vertical tower blocks, one straight tower and another stepped tower which is in slope and leaning to the straight tower. The project is in the prime area of Colombo facing Beira Lake as well as the Indian Ocean. The finishes of the project are on high calibre, with Italian marble, wooden flooring, central air-conditioning, hot water supply and super luxurious sanitary fixtures. Additionally, there is a Resident Club on the fifth level with a garden around it and on 63rd level with the swimming pool and other recreational facilities.
The apartments have been booked by the Crème de la crème of Sri Lanka’s social fabric, HNI and a noteworthy number of overseas residents from the Sri Lankan diaspora. Notably, ‘Altair’ a is the biggest FDI investment in Colombo for real estate to date. Altair is a symbol of a successful foreign investment and a show-piece for the Sri Lankan Government to attract further investment in Sri Lanka.
A cheering campaign to support Team Sri Lanka at TOKYO 2020
ICL Brands’ Eva lived up to its’ promise of ‘Leading with Confidence’ by partnering with the National Olympic Committee of Sri Lanka (NOCSL) as the Official Cheering Partner for Team Sri Lanka at TOKYO 2020, Olympics. The brand initiated a massive communication campaign, centered around the ‘Official Cheering Song’ to drive Sri Lankans to rally around Team Sri Lanka and support the 9 athletes that bear the pride of the nation at TOKYO 2020.
The launch of the ‘Official Cheering Song’ took place at the Capital Maharaja Group head office with the participation of Sri Lanka’s very own Olympic Silver Medalist, Susanthika Jaysinghe, NOCSL Women’s Committee Chairperson, Niloo Jayatilake, NOCSL’s Executive Committee Board Member, Fazil Hussain and Chethika Rajapaksha, Marketing Manager for ICL Brands. Amidst the other guests who graced the occasion were Sunil Kanojia, Group CEO – CMG, Shanthi Bhagirathan, Group Director – ICL Brands, Rakesh Khosla,CEO – ICL Brands and others.
The event was live streamed via multiple social media platforms simultaneously, reaching out to a wide audience and kicking off the cheering campaign officially. Eva’s campaign to cheer for Team Sri Lanka will continue throughout the period of TOKYO 2020 Olympics on multiple media platforms.
Susanthika Jayasinghe who graced the occasion as chief guest praised the initiative ”’I am extremely happy to see the brands of highest caliber such as Eva coming forward to support Sri Lankan athletes at Olympics. As an athlete who has represented and won for Sri Lanka on the Olympic stage, I know how much this means to our athletes in Tokyo right now”.
Sri Lanka Development Bonds auction held during July 20-27, 2021
Date of settlement July 30, 2021
An issuance window for SLDBs will be opened with the announcement of the auction results until close of business of day prior to settlement (i.e., preferably by 3.00 pm on 29.07.2021) at the Weighted Average Fixed Rates determined for respective maturities at the auction, up to the limit specified for possible upsizing, at first come first served basis. Applications for subscription through the issuance window are to be forwarded to ‘email@example.com’ within the stipulated time period.
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