Domestic financing increased by Rs. 147 billion in first five months of 2022

During the five months ending May 2022, domestic financing increased to Rs. 742.7 bn compared to Rs. 595.7 bn in the corresponding period of 2021. Foreign financing recorded a net repayment of Rs. 106.0 bn during the period from January to May 2022, compared to a net borrowing of Rs. 39.2 bn recorded in the corresponding period of 2021, according to Weekly Economic Indicators of the Central bank

The report further said:

Outstanding central government debt increased to Rs. 21,696.6 bn by end March 2022 from Rs. 17,589.4 bn as at end 2021.

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 and decrease in the currency in circulation.

The total outstanding market liquidity was a deficit of Rs. 614.942 bn by the end of this week, compared to a deficit of Rs. 634.381 bn by the end of last week.

During the five months ending May 2022, government revenue increased to Rs. 811.9 bn compared to Rs. 630.1 bn recorded in the corresponding period of 2021.

During the five months ending May 2022, overall budget deficit increased to Rs. 636.7 bn compared to Rs. 634.8 billion recorded in the corresponding period of 2021.

During the period from January to May 2022, total expenditure and net lending increased to Rs. 1,449.4 bn compared to Rs. 1,265.6 bn recorded in the corresponding period of 2021.

During the first seven months of 2022, tea production decreased in comparison to the corresponding period of the previous year due to the unavailability of required fertilisers. Rubber production also decreased due to the combined result of adverse weather conditions in rubber growing areas, the spread of fungal disease and fertiliser shortages. However, coconut production increased considerably due to the lagged effect of favourable weather conditions that prevailed throughout 2021.

NCPI based headline inflation (Y-o-Y) increased to 66.7 per cent in July 2022 from 58.9 per cent in June 2022 due to increases of prices of items in both food and non-food categories. Meanwhile, food inflation (Y-o-Y) and non-food inflation (Y-o-Y) recorded at 82.5 per cent and 52.4 per cent, respectively, in July 2022. Furthermore, the NCPI measured on an annual average basis, increased to 25.9 per cent in July 2022 from 20.8 per cent in June 2022.By 26th August 2022, the All Share Price Index (ASPI) decreased by 2.03 per cent to 8,793.39 points and the S&P SL 20 Index decreased by 3.38 per cent to 2,863.75 points, compared to the index values of last week.

During the period under review (20.08.2022 to 26.08.2022), crude oil prices largely showed an increasing trend. Prices increased mainly due to Saudi Arabia’s warning that OPEC could cut output to correct the recent drop in crude oil futures prices. However, prices decreased later due to expectations on possible return of Iranian oil to the global market and on concerns of rising US interest rates. Overall, during the period under review, Brent and WTI prices increased by US dollars 4.92 per barrel and US dollars 3.66 per barrel, respectively.

Weekly AWPR for the week ending 26th August 2022 increased by 8 bps to 25.76 per cent compared to the previous week.During the year up to 26th August 2022, the Sri Lankan rupee depreciated against the US dollar by 44.5 per cent. Given the cross currency exchange rate movements, the Sri Lankan rupee depreciated against the Indian rupee by 40.5 per cent, the Euro by 37.0 per cent, the pound sterling by 36.7 per cent and the Japanese yen by 34.1 per cent during this period.