Home » Sri Lankan economy continues to battle worst economic crisis

Sri Lankan economy continues to battle worst economic crisis

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Sri Lankan economy continues to battle through the worst economic crisis on record facing an unsustainable debt and severe balance of payments crisis, which is having a negative impact on growth and poverty, Central Bank’s weekly economic indicator report revealed.

Broad money (M2b) expanded by 15.3 per cent, on a year-on-year basis, in November 2022.

Net Credit to the Government from the banking system increased by Rs. 114.2 bn in November 2022.

Outstanding credit to public corporations declined by Rs. 17.4 bn in November 2022.Outstanding credit extended to the private sector declined by Rs. 30.9 bn in November 2022, the report indicated.

Sri Lanka’s state revenues grew 37 percent to Rs. 1,586 billion up to October 2022, while current spending also grew 20 percent from a higher base, official data showed, but the overall deficit narrowed compared to an inflated GDP.

The reserve money decreased compared to the previous week mainly due to decrease in the deposits held by the commercial banks with the Central Bank

The budget deficit for the 10 months narrowed to 5.5 percent of projected GDP in 2022 from 8.6 percent in 2021.

The total outstanding market liquidity was a deficit of Rs. 332.962 bn by the end of last week, compared to a deficit of Rs. 321.191 bn by the end of previous week

During the ten months ending October 2022, government revenue and grants increased to Rs. 1,588.3 bn compared to Rs. 1,156.5 bn recorded in the corresponding period of 2021.

During the period from January to October 2022, total expenditure and net lending increased to Rs. 3,235.0 bn compared to Rs. 2,731.7 bn recorded in the corresponding period of 2021.

During the ten months ending October 2022, overall budget deficit increased to Rs. 1,646.7 bn compared to Rs. 1,575.2 bn recorded in the corresponding period of 2021

During the ten months ending October 2022, domestic financing decreased to Rs. 1,619.4 bn compared to Rs. 1,717.4 bn in the corresponding period of 2021.

Foreign financing recorded a net borrowing of Rs. 27.3 bn during the period from January to October 2022, compared to the net repayment of Rs. 142.2 bn recorded in the corresponding period of 2021.

Outstanding central government debt increased to Rs. 25,210.7 bn by end October 2022 from Rs. 17,589.4 bn as at end 2021. By end October 2022, total outstanding domestic debt amounted to Rs. 13,596.9 bn while the rupee value of total outstanding foreign debt amounted to Rs. 11,613.8 bn.

During the year up to 13th January 2023, the Sri Lankan rupee appreciated against the US dollar by 0.2 per cent.

Given the cross currency exchange rate movements, the Sri Lankan rupee depreciated against the Euro by 1.5 per cent, the pound sterling by 1.0 per cent, the Indian rupee by 1.8 per cent and the Japanese yen by 2.4 per cent during this period.

Earnings from exports increased by 6.0 per cent (year-on-year) to US dollars 12,026 mn during the eleven months ending November 2022 .as a result of increased earnings mainly from exports of textiles and garments (11.6%),

Import expenditure declined by 8.3 per cent (year-on-year) to US dollars 16,865 mn during this period, mainly due to lower imports of machinery and equipment (-26.5%), base metals (-54.4%), telecommunication devices (-81.9%) and medical and pharmaceuticals (-36.9%).

Accordingly, the deficit in the trade account narrowed to US dollars 4,839 mn during January-November 2022 from US dollars 7,054 mn in the corresponding period of 2021.

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