The Economy 

Central Bank of Sri Lanka (CBSL) keeps policy rates steady to tame inflation 

CBSL decides to maintain interest rates from 9 per cent to 10 per cent as expected, to control inflation targeted at 5 per cent. The move comes amid concerns about potential inflation following a recent increase in the Value Added Tax (VAT) to 18 per cent from the previous 15 per cent. 

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Debt restructuring in Sri Lanka to be finalised by April 

Sri Lanka’s Government expects to finalize a foreign debt restructuring plan by April, following a USD 2.9 billion IMF bailout in 2024. The President’s office emphasized that completing the debt restructuring within the first quarter of the year is crucial, with the IMF having released a USD 337 million tranche of its loan following an “in principle” debt agreement with China, Sri Lanka’s major bilateral lender. 

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Sri Lanka welcomes over 142,000 tourists in first 3 weeks of 2024 

Sri Lanka had a strong tourism recovery in 2024, with over 142,000 visitors in the first three weeks of January, marking a significant increase from previous years, Arrivals led from India, Russia, and the UK. 

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⚖ Politics & Policy 

Federation of Bangladesh Chamber of Commerce and Industry discusses economic cooperation with Sri Lanka 

Sri Lanka’s High Commissioner to Bangladesh and the President of the Federation of Bangladesh Chamber of Commerce and Industry (FBCCI) discussed potential collaborations between the two countries. Sri Lanka aims to export spices, tea, coconut products, healthcare items and construction materials to Bangladesh. 

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Officials from Jordan and Sri Lanka discuss boosting economic ties 

The Vice President of the Amman Chamber of Commerce discussed enhancing economic ties between Jordan and Sri Lanka with 

the Sri Lankan Ambassador including increased delegation visits, exhibitions, bilateral meetings and expanding traded goods. The focus is on fostering collaboration in commerce, tourism, and investment sectors. 

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United Nations Development Programme (UNDP) and UN Global Compact Sri Lanka Renew Strategic Collaboration 

The UNDP and UN Global Compact Sri Lanka have renewed their commitment through a third MOU focusing on private-sector participation for sustainable development in Sri Lanka. As the first non-private sector entity on the Network Sri Lanka Board, UNDP aims to promote responsible business practices aligned with SDGs. 

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Online Safety Bill passed in Parliament 

Sri Lanka’s Online Safety Bill, aimed at regulating online content, was passed with amendments in Parliament leading to objections from opposition figures who claim it threatens free speech. Stakeholders, including SLASSCOM, FITIS, CSSL and BCS Sri Lanka collectively voiced concerns and urges the Government to collaborate on developing legislation that strikes a balance between national security and the growth of the IT and BPM industries in response to the proposed Online Security Bill. 

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⁉ What you need to know 

Apparel exports rebound 

Apparel exports rebounded in December 2023 with a record high of USD 415.6 million, despite the industry’s overall negative growth in the year. Total 2023 exports amounted to USD 4.5 billion, down 19 per cent from the peak in 2022. The Joint Apparel Association (JAAF) anticipates 2024 exports to stabilize at USD 4.5 billion, emphasizing cost competitiveness and economic stability. 

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Bangladesh’s apparel exports to the European Union (EU) decline by 1.24 per cent Year on Year (YoY) in the first half of 2024 

In the first half of the fiscal year 2023-24, Bangladesh’s exports of ready-made apparel to the European Union (EU) declined by 1.24 per cent YoY to USD 11.36 billion. The decrease is attributed to a drop in overall EU imports, particularly from Germany, due to weakened purchasing power. 

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Disclaimer – This Advisory is intended for circulation among JAAF stakeholders only. Please do not circulate or share on social media. 

This Advisory, written for our partners interested in developments in Sri Lanka against the backdrop of the current crisis, is an update on the one issued last week. This document summarises results covering significant political and economic events. The Advisory includes economic, political, social and governance perspectives. It draws on news reports, analyses, Government announcements and documents, and other sources that we may be in contact with or have access to. 

This Advisory was prepared by the Strategic Communications Unit of Adfactors PR Lanka. 

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