The government has allocated up to 0.1 percent of GDP for containment measures, as well as US$5 million (0.01 percent of GDP) to the SAARC COVID-19 Emergency Fund.
The President has announced that cash payments totaling around 0.25 percent of GDP will be made to vulnerable groups.
The 2020 Q1 payment deadlines for income tax, VAT and certain other taxes were extended until end-April. Other measures announced include tax exemptions for masks and disinfectant, price ceilings on essential food items, as well as concessional loans and food allowances for the poor.
The President has also established a Task Force on Economic Revival and Poverty Eradication and a special fund for containment, mitigation and social welfare spending, inviting local and foreign tax-free donations.
In late April, import duties on gasoline and diesel were increased to mitigate weak revenue collections.
In Summary Sri Lanka has ...
As of May 20, there have been net capital outflows of around US$460 million (0.5 percent of GDP) since mid February, mostly from the domestic treasury securities market.
The Sri Lankan currency has also depreciated by around 3.1 percent against the US dollar since that time. Sri Lanka’s EMBIG spread has more than doubled since mid-February.
March 31, the central bank announced a $250 million refinancing facility for banks, enabling them to expand their lending
MONETARY AND MACRO-FINANCIAL
The Central Bank of Sri Lanka (CBSL) has reduced monetary policy rates by 100 basis points since March. The required reserve ratio on domestic currency deposits of commercial banks has been lowered by one percentage point, the liquidity coverage ratio and net stable funding ratios have been reduced to 90 percent and the rate at which CBSL grants advances to commercial banks has been lowered by 500 basis points. Commercial banks cannot declare dividends, share buy backs or increase payments to directors until end-2020.
The President announced a debt repayment moratorium, which includes a six month moratorium on bank loans for the tourism, garment, plantation and IT sectors, and small & medium industries, with reduced rate working capital loans and investment-purpose loans for these sectors. There will also be a three-month moratorium on small-value personal banking and leasing loans.
The interest rate on credit cards will be capped, for transactions up to a certain amount, with a reduction in the minimum monthly repayment. Financial institutions are also requested to reschedule non-performing loans. Lower capital conservation buffer requirements and a relaxation of loan classification rules have been announced. In addition, state-owned institutions will invest in treasury securities to stabilize the money market rate at 7 percent.
The Monetary Board of CBSL, on 03rd April 2020 reduced the policy rates further by 25 bps, bringing the SDFR and SLFR to 6.00% and 7.00% respectively. This is the second policy rate reduction post-COVID-19. Previously, CBSL also reduced the Statutory Reserve Ratio (SRR) by 100 bps to 4.0%
May 20, Colombo: With corporate and individual donations, the COVID–19 Healthcare and Social Security Fund set up by President Gotabaya Rajapaksa has now surpassed Rs. 1.128 billion
On the 03rd of April 2020, the World Bank announced a USD 128.6 Mn loan to combat COVID-19, this is along with a Chinese loan facility of USD 500.0 Mn in March 2020.
May 26, Colombo: Sri Lanka’s merchandise export earnings in April 2020 have recorded a historical decrease by 64 percent to US$ 277.4 million from US $ 772.57 million recorded in April 2019, the state’s Export Development Board (EDB) said.
Sri Lanka has USD 1.0 Bn in ISBs due in October 2020 among a total of USD 4.8 Bn in debt repayments due in the next twelve months.