Demand for imports in Sri Lanka continues to remain subdued
The demand for imports in Sri Lanka continues to remain subdued, although a significant share of import restrictions has already been relaxed, the Central Bank of Sri Lanka said.
The Central Bank said that the tight financial conditions was the cause for the subdued demand for imports in Sri Lanka.
“Although a significant share of import restrictions has already been relaxed, demand for imports continued to remain subdued, reflecting the tight financial conditions,” the Central Bank of Sri Lanka said in a statement.
Meanwhile, Central Bank also said that the Sri Lanka Rupee recorded an appreciation of around 12 per cent against the US dollar thus far during the year.
The bank also said that the level of gross official reserves was estimated at around US dollars 3.8 billion as at end July 2023, including the swap facility from the People’s Bank of China, while measures were also taken to repay a part of the swap facility with Bangladesh Bank, in addition to the repayment of maturing debt of multilateral lending agencies.
The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 23 August 2023, 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 11.00 per cent and 12.00 per cent, respectively.
The Board arrived at this decision following a careful analysis of current and expected developments in the domestic as well as the global economy, while noting the significant easing of monetary conditions effected since June 2023.
The Monetary Board took note of the downward adjustment of market interest rates in response to monetary policy easing measures implemented thus far and the need to allow space for further adjustment of market interest rates swiftly.
However, the Board observed that market interest rates of certain lending products remain excessive and are not in line with the current monetary policy stance.
Moreover, the Board anticipates a faster reduction in overall market lending interest rates in line with the recent monetary policy easing measures.
Accordingly, the Board decided to adopt targeted administrative measures to reduce specific lending interest rates that it considered to be excessive and direct the licensed banks to reduce overall rupee lending interest rates by an appropriate margin in the period ahead. (Colombo Gazette)
