SRI LANKA UPDATE | 28 July – 03 AUGUST 2023

The Economy:

Inflation as per Colombo Consumer Price Index (CCPI) in single digits in July after 20 months –

Headline inflation, as determined by the CCPI’s YoY movement, dropped from 12 per cent in June 2023 to 6.3 per cent in July. The Central Bank of Sri Lanka (CBSL) stated that the transition to single digits took about 20 months and is mostly consistent with the disinflation path predicted in January 2023. The YoY change in food prices fell to -1.4 per cent in July 2023 from 4 per cent in June 2023, while the year-over-year change in non-food prices declined to 10.5 per cent in July from 16.2 per cent in June 2023. Based on future macroeconomic estimates from the CBSL, the forecasted decline in inflation is anticipated to continue through 2023.

Workers remittances in 1H of 2023 up by 75 per cent to USD 2.8 billion – Workers’ remittances grew by 75.3 per cent to USD 2.8 billion in 1H of 2023, while inflows in June showed a similar increase YoY. According to the CBSL, worker remittances were USD 476 million in June 2023, up from USD 274 million in May 2023.

Gross foreign inflows to Government Securities tops USD 500 million in 1H of 2023 – In 1H of 2023, Gross Foreign Investment in the market for Government Securities surpassed USD 500 million. Data from the CBSL show that from January to June 2023, inflows were USD 530 million, compared to just USD 11 million during the same period last year. The net inflow for the month of June was USD 63 million, while the total net inflow from January to June 2023 was USD 426 million. According to CBSL, increased investor interest in Treasury Bills over the past six months was primarily driven by clearer information about domestic debt optimization initiatives.

Sri Lanka’s tourist arrivals at 763,000; USD 800 million in revenue from January to July – Sri Lanka welcomed 763,000 tourists in the first seven months of 2023, generating an impressive income of around USD 800 million.

Politics & Policy:

Cabinet approves continuation of Samurdhi welfare payments – The State Minister of Finance declared that the Cabinet had approved a plan to continue disbursing 393,094 Samurdhi welfare payment to claimants who weren’t eligible for the Aswesuma welfare benefit programme. Aswesuma welfare benefit payments commenced from 01st July 2023 with payments distributed among four social categories, namely transitional, vulnerable, poor and extremely poor. With 1.28 million families already receiving Samurdhi benefits, 887,653 of those families are also eligible for ‘Aswesuma’ welfare benefits.

Government instructs the Legal Draftsman to prepare Bill amending the National Authority on Tobacco and Alcohol Act – The Government has requested the legal draftsman to create a bill to alter the National Authority on Cigarettes and Alcohol Act No. 27 of 2006, which is a key step toward strengthening the control and oversight of the cigarette and alcohol industries. The Cabinet of Ministers agreed with the recommendation made in this regard by the Health Minister and the amendments seek to strengthen the appointment of a Medical Officer of Health and an Additional Medical Officer of Health as authorized officers.

Asia’s logistics leader Kerry plans on expanding operations in Sri Lanka – Kerry, a top logistics service provider in Asia, is optimistic about Sri Lanka’s potential as a center in South Asia, which has led it to increase operations in the island nation. Managing Director of operations and technology for Kerry Logistics Network and managing director of South and South East Asia Alan Yip recently visited Sri Lanka to discuss future plans.

New law to streamline business operations by October 2023 – Chairman of the Parliament Select Committee emphasized the introduction of a Business Facilitation Law intended to lower barriers for investors. He also emphasised the need for a strategic public service management policy as opposed to conventional administration techniques, which would address bureaucratic barriers. He claimed that to make Sri Lanka an investor-friendly destination, the Government, under the leadership of President Wickremesinghe, has set out on a transformative journey. He described the Government’s actions in simplifying business processes, will increase Sri Lanka’s ranking in the Ease of Doing Business Index, which is currently at 99.

  

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 summaries developments 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 from 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. For inquiries, contact pumudika.amarasekara@adfactorspr.com