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People walk past the main entrance of the Sri Lanka's Central Bank in Colombo, Sri Lanka March 24, 2017. The Central Bank of Sri Lanka (CBSL) lowered the standing deposit facility rate and the standing lending facility rate by 100 basis points each to 10% and 11%, respectively, it said in a statement. Sri Lanka, however, failed to reach an agreement with the IMF in its first review of the bailout package last month, due to a potential shortfall in government revenue. Even with policy loosening Sri Lanka could find it difficult to post (a 2% contraction) this year," said Udeeshan Jonas, chief strategist at equity research firm CAL Group. The central bank reiterated that it would like to see market interest rates come down further.

Persons: Dinuka, CBSL, Udeeshan Jonas, Thilina Panduwawala, Uditha Jayasinghe, Swati Bhat, Sam Holmes, Sudipto Ganguly Organizations: Sri, Central Bank, REUTERS, Rights, International Monetary Fund, Central Bank of Sri, IMF, CAL, Frontier Research, Bank Locations: Colombo, Sri Lanka, Lanka's, Central Bank of Sri Lanka, Sri, Lanka

The Central Bank of Sri Lanka (CBSL) cut its standing deposit facility rate and standing lending facility rate to 11% and 12%, respectively, from 13% and 14% previously. This follows a 250 bps cut at its last policy meeting in June. The central bank raised rates by a record 950 bps last year to tame inflation and by 100 bps on March 3. Sri Lanka's key inflation index peaked at 70% year-on-year in September and has come down gradually. "Now that they are bringing down rates fast, they will issue very long-term bonds and reduce borrowing costs for the government.

Persons: Gotabaya Rajapaksa, Ranil Wickremesinghe, CBSL, Sri, Dimantha Mathew, Uditha Jayasinghe, Swati Bhat, Sudipto Ganguly, Raju Gopalakrishnan Organizations: International Monetary Fund, Central Bank of Sri, First, Thomson Locations: COLOMBO, Lanka's, Central Bank of Sri Lanka

The Central Bank of Sri Lanka (CBSL) cut its standing deposit facility rate (SDFR) and standing lending facility rate (SLFR) to 11% and 12%, respectively, from 13% and 14% previously, in line with expectations. The 200 basis point cut follows a 250 bps cut at its last policy meeting in June. The central bank raised rates by a record 950 bps last year to tame inflation and by 100 bps on March 3. Sri Lanka's key inflation index peaked at 70% year-on-year in September and has come down gradually. Analysts expect more rate cuts in coming months to aid economic recovery and reduce borrowing costs for corporates and the government.

Persons: Gotabaya Rajapaksa, Ranil Wickremesinghe, CBSL, Sri, Dimantha Mathew, Thilina Panduwawala, Sudipto Ganguly, Raju Gopalakrishnan Organizations: International Monetary Fund, Central Bank of Sri, First, corporates, Frontier Research, Thomson Locations: COLOMBO, Sri Lanka, Central Bank of Sri Lanka

☆ Factbox: Sri Lanka asks foreign investors for a 30% haircut in debt restructure
▼ + stars: | 2023-06-29 | by ( ) www.reuters.com time to read: +5 min

The domestic debt restructure is needed to help the country reach the IMF programme goal of reducing overall debt to 95% of GDP by 2032. WHAT WILL THE DOMESTIC DEBT RESTRUCTURING INCLUDE? "We are asking foreign debt holders for a 30% haircut but that is still under discussion," Weerasinghe said. This will be implemented in Phase 2 of the domestic debt restructuring. Aiming to contain any potential market volatility, Sri Lanka declared a five-day holiday from June 29 to July 3.

Persons: Read, Nandalal Weerasinghe, Weerasinghe, Mahinda Siriwardana, CBSL, Uditha Jayasinghe, Shilpa Jamkhandikar, Kim Coghill, Emelia Organizations: International Monetary Fund, IMF, Sri Lanka Development, Bank of Sri, Treasury, Sri, Thomson Locations: Colombo, Sri Lanka, Britain, Bank of Sri Lanka, China, Japan, India

☆ Sri Lanka to remain on policy loosening course, next rate cut likely in August -analysts
▼ + stars: | 2023-06-02 | by ( Uditha Jayasinghe | ) www.reuters.com time to read: +3 min

Sri Lanka plunged into crisis last year as its foreign exchange reserves ran out, food and energy prices spiralled and protesting mobs forced the ouster of the country's then president. "With no inflation risk the central bank will cut rates aggresssively to push demand and target growth." The CBSL expects Sri Lanka's GDP to contract by 2% in 2023, slightly better than the 3% contraction predicted by the IMF. Five analysts backed CBSL and IMF estimates, two said Sri Lanka would perform better and one projected a steeper contraction of 4.8%. []Sri Lanka will begin rolling back import restrictions on 300-400 items from next week, as per a statement from the finance ministry which gave no further details.

Persons: CBSL, Dimantha Mathew, Kenji Okamura, Uditha Jayasinghe, Devayani, Swati Bhat, Toby Chopra Organizations: Sri, Citi Bank economists, International Monetary Fund, First, IMF, Thomson Locations: COLOMBO, Lanka's, Sri Lanka's, Sri Lanka, Colombo

[1/2] Staff members work at a packing section at a garment factory in Colombo after the International Monetary Fund's executive board approved a $3 billion bailout for Sri Lanka. The Central Bank of Sri Lanka (CBSL) cut its standing deposit facility rate and standing lending facility rate to 13% and 14%, respectively, from 15.5% and 16.5% previously. The central bank raised rates by a record 950 basis points last year to tame inflation and by 100 bps on March 3 this year. "There is a need to bring the interest rates down because the cost of government financing is high," said Udeeshan Jonas, chief strategist at equity research firm CAL. Sri Lanka secured a $2.9 billion bailout from the IMF in March and aims to complete restructuring debt talks by September, coinciding with the first review by the lender.

Persons: Dinuka, Udeeshan Jonas, Uditha Jayasinghe, Swati Bhat, Shri Navaratnam, Raju Gopalakrishnan Organizations: Staff, Monetary Fund's, Sri, REUTERS, Central Bank of Sri, Colombo, Monetary Fund, Reuters, CAL, Thomson Locations: Colombo, Sri Lanka, Lanka's, Central Bank of Sri Lanka

☆ Sri Lanka c.bank to hold rates as inflation stays high
▼ + stars: | 2023-05-30 | by ( Uditha Jayasinghe | ) www.reuters.com time to read: +2 min

COLOMBO, May 30 (Reuters) - Sri Lanka's central bank is expected to keep rates unchanged at its policy meeting this week as it continues to support the debt-laden economy amid persistently high inflation. Sri Lanka secured a $2.9 billion bailout from the International Monetary Fund (IMF) in March and aims to complete restructuring debt talks by September. Thirteen out of the fifteen analysts and economists polled by Reuters expect the Central Bank of Sri Lanka (CBSL) to hold benchmark rates steady on Thursday, at its fourth policy rate announcement this year. The central bank raised rates by a record 950 basis points last year to tame inflation and by 100 bps on March 3. The first review of its IMF programme is expected in September and Sri Lanka plans for it to coincide with the completion of debt restructuring talks with creditors.

The bank raised its standing deposit facility rate and standing lending facility rate by 100 basis points each to 15.50% and 16.50%, respectively, it said in a statement. The country is awaiting approval of a $2.9 billion IMF bailout package as it endures its worst financial crisis since independence from Britain in 1948. The central bank raised rates by a record 950 basis points last year to tame inflation and then kept them steady until Friday's 100 basis point increase. "There have been some differences between the CBSL and IMF staff on the inflation outlook," the Central Bank of Sri Lanka (CBSL) said in its statement. But depends on whether the market reads this as positive for getting IMF (bailout) in March."

☆ Sri Lanka holds rates steady to rein in inflation, as expected
▼ + stars: | 2023-01-25 | by ( ) www.reuters.com time to read: 1 min

COLOMBO, Jan 25 (Reuters) - Sri Lanka's central bank held interest rates steady for a third straight meeting on Wednesday, as widely expected, saying the prevailing tight monetary stance is critical to reining in inflationary pressures. The Central Bank of Sri Lanka had increased rates by a massive 950 basis points between August 2021 to July 2022 to tame stubbornly high inflation. The Standing Lending Facility (LKSLFR=ECI) rate was held steady at 15.50% while the Standing Deposit Facility Rate (LKSDFR=ECI) was kept unchanged at 14.50%. Thirteen out of 14 economists and analysts polled by Reuters expected CBSL to hold rates. Reporting by Swati Bhat and Uditha Jayasinghe; Editing by Jacqueline WongOur Standards: The Thomson Reuters Trust Principles.

COLOMBO, Nov 24 (Reuters) - Sri Lanka's central bank on Thursday threatened administrative intervention to control high market interest rates that it regarded as out of line with the inflation outlook. Any such action, interpreted by economists as meaning it might push market rates down, would lower the government's high borrowing costs. However, it was unclear how the central bank could force investors to support public finances at lower rates than they expected. "If an appropriate downward adjustment in the market interest rates would not take place in line with the envisaged disinflation path, the central bank will be compelled to impose administrative measures to prevent any undue movements in market interest rates," CBSL said in a statement. "The statement was quite aggressive in saying they are prepared to use non-policy rate tools to nudge market rates, including deposit rates, lower," he added.

COLOMBO, Nov 24 (Reuters) - Sri Lanka's central bank held interest rates steady on Thursday, as widely expected, but said it expected a moderation in market interest rates in line with prevailing policy rates. The Standing Lending Facility (LKSLFR=ECI) rate was held steady at 15.50% while the Standing Deposit Facility Rate (LKSDFR=ECI) was kept unchanged at 14.50%. "If an appropriate downward adjustment in the market interest rates would not take place in line with the envisaged disinflation path, the central bank will be compelled to impose administrative measures to prevent any undue movements in market interest rates," it added. Thirteen out of 15 economists and analysts polled by Reuters had forecast the central bank's interest rates to remain unchanged as it waited to see effects of its earlier hikes to filter through to prices and the broader economy. Sri Lanka, which defaulted on its foreign debt repayments in May, secured a preliminary IMF deal for a $2.9 billion bailout in early September.

COLOMBO, Nov 22 (Reuters) - Sri Lanka's central bank is expected to keep rates steady as inflation shows signs of easing and as authorities focus on discussions to secure a $2.9 billion International Monetary Fund (IMF) bailout to stabilise its crisis-hit economy. If global economic stress starts to ease and if Sri Lanka secures an IMF deal before next March we can expect rate cuts in mid-2023," said Visaahan Arumainayagam, analyst for Colombo-based brokering firm Asha Securities. After hitting an annual peak of 68.9% in September with food inflation climbing to 93.7%, consumer inflation moderated slightly to 66% in October. read moreAn acute dollar shortage has left Sri Lanka struggling to pay for essential imports of food, fuel and medicine, with all eyes on the IMF bailout to try and stabilise the nation's perilous debt situation and finances. "Sri Lanka is in need of some deep economic reforms which are politically challenging, overcoming this will be difficult."

☆ Sri Lanka inflation rate surges to 70.2% in August
▼ + stars: | 2022-09-21 | by ( Uditha Jayasinghe | ) www.reuters.com time to read: +2 min

Register now for FREE unlimited access to Reuters.com RegisterSri Lankan rupees are seen in a bowl at a vegetable vendor's shop amid the rampant food inflation, amid Sri Lanka's economic crisis, in Colombo, Sri Lanka, July 29 , 2022. REUTERS/Kim Kyung-HoonSept 21 (Reuters) - Consumer inflation in Sri Lanka accelerated to 70.2% in August,the statistics department said on Wednesday, as the island nation reels under its worst economic crisis in decades. Register now for FREE unlimited access to Reuters.com RegisterThe Central Bank of Sri Lanka (CBSL) said in August that the inflation rate would moderate after peaking at about 70% as the country's economy slowed. It acts as a leading indicator for national prices and shows how inflation is evolving in Sri Lanka's biggest city. An acute dollar shortage, caused by economic mismanagement and the impact of the COVID-19 pandemic, has left Sri Lanka struggling to pay for essential imports including food, fuel, fertiliser and medicine.

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