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1. EconomicCapsule
February 2024
Research & Development Unit
325th Issue

2. CONTENTS
BANKING & FINANCE
 CBC Results 31.12.2023
 SLSI honours ComBank for winning ‘World Class’ Global Performance Excellence
Award
 ComBank and Visa launch Corporate Credit Cards in Sri Lanka
 ComBank LEAP GlobalLinker partners with IDB to support SMEs
ECONOMY, BUSINESS & DEVELOPMENT
 CBSL – Monetary Policy Report: February 2024
 CBSL relaxes restrictions imposed on the Standing Facilities
 Appointment of two new members to the Governing Board of CBSL
 Colombo Port January transshipment volumes growth tops 25%
 Sri Lanka opens doors to Indian tourists with virtual Unified Payments
Interface launch via LankaQR
 IMF concludes fiscal authority capacity development mission
 Sri Lanka sends revised debt proposal to Private Creditors
 News Snippets
GLOBAL UPDATE
 Spiraling ocean freight rates from Far East to US may have peaked?
 France seeks first meeting for India-to-EU infrastructure link
 China’s property crisis
 Elections – Indonesia, Pakistan, El Salvador & Finland
 News Snippets
Research & Development Unit

3. Banking & Finance
News
Research & Development Unit

4. Research & Development Unit
Source: Respective Financial Statements
CBC Results 31.12.2023

5. Research & Development Unit
The Sri Lanka Standards Institution (SLSI)
recently paid a special tribute to the
Commercial Bank of Ceylon in
recognition of the Bank’s victory at the
Global Performance Excellence Awards
of the Asia Pacific Quality Organization
(APQO) last year.
SLSI honours ComBank for winning ‘World Class’ Global
Performance Excellence Award
Incidentally, Commercial Bank is the only
bank in the country to win the SLSI
National Quality Award, the highest award
presented in Sri Lanka to recognize
performance excellence in quality.

6. Research & Development Unit
Source: Reuters
The Commercial Bank of Ceylon
has launched the Visa
Signature and Visa Platinum
Corporate Credit Cards in Sri
Lanka in collaboration with
Visa.
ComBank andVisa launch Corporate Credit Cards in Sri
Lanka
The corporate cards will be issued to employees of corporates and other business
entities. This new product enables corporates to manage expenses of employees, and
the card is linked to a corporate credit card account of each company.

7. Research & Development Unit
The Commercial Bank of Ceylon launched a
new initiative to support small and medium-
sized enterprises (SMEs) via a partnership with
the Industrial Development Board (IDB), the
premier state organization entrusted with the
progress of the industrial sector in Sri Lanka.
ComBank LEAP GlobalLinker partners with IDB to
support SMEs
The partnership will provide stakeholders of the IDB access to ‘Commercial Bank LEAP
GlobalLinker’ – the Bank’s digital platform designed to empower SMEs to reach cross-
border levels in the global market – from the ‘BizConnect’ portal on the IDB’s website.

8. Economy, Business
& Development
News
Research & Development Unit

9. Research & Development Unit
CBSL – Monetary Policy Report: February 2024
Highlights in relation to inflation
Headline inflation (YoY) is anticipated to experience a
short-lived acceleration from early 2024, driving
quarterly average inflation levels during the year
somewhat above the 5% target.
Headline inflation is expected to peak in Q3-2024, mainly due to the unfavorable
base effect stemming from sharp disinflation recorded in Q3-2023.
Near-term surge in headline inflation is unlikely to
persist due to subdued demand conditions, as the
economy is projected to operate below its full capacity
for an extended period.
Read more: https://www.cbsl.gov.lk/en/publications/economic-and-financial-reports/monetary-policy-reports/monetary-policy-report-2024-february

10. Research & Development Unit
CBSL relaxes restrictions imposed on the Standing Facilities
The Central Bank of Sri Lanka introduced restrictions on the usage of the Standing Facilities by the
Licensed Commercial Banks (LCBs) under the Open Market Operations (OMOs), with effect from 16
January 2023.
These measures were imposed with the intention of reducing the overdependence of LCBs on the
overnight facilities offered by the Central Bank, supporting the reactivation of the domestic money
market, particularly the call money market, and inducing LCBs to introduce internal corrective measures.
These restrictions were relaxed with effect from 16 February 2024.
Source: https://www.cbsl.gov.lk/en/news/relaxation-of-restrictions-imposed-on-standing-facilities
Variable Previous restriction New
Standing Deposit Facility (SDF) Access to the Standing Deposit Facility (SDF) was
limited to a maximum of five (05) times per calendar
month
Access to the Standing Deposit Facility (SDF) was
limited to a maximum of ten (10) times per
calendar month
Standing Lending Facility (SLF) Access to the Standing Lending Facility (SLF) was
limited to 90 per cent of the Statutory Reserve
Requirement (SRR) of each LCB, at any given day.
The restriction on the SLF will be removed
Impact : Expected to accelerate the downward adjustments in market interest rates

11. Research & Development Unit
Appointment of two new members to the Governing Board of
CBSL
Source: https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/press/pr/press_20240212_appointment_of_two_new_members_to_the_governing_board_of_cbsl_e.pdf
In terms of the provisions of the Central Bank of Sri Lanka (CBSL) Act, No. 16 of 2023, the Governing Board
(GB) of the CBSL has been established as the body responsible for overseeing the administration and
management of the affairs of the CBSL and determination of the general policies of the CBSL.
The GB comprises the Governor of the CBSL, Dr. P Nandalal Weerasinghe, who serves as the Chairman of the
GB, Mr. A N Fonseka (Appointed Member of the Monetary Board of the CBSL since 27.07.2022 who continued
to serve as a Member of the GB), Dr. Ravi Ratnayake (appointed on 21.09.2023), Mr. Anushka S Wijesinha
(appointed on 21.09.2023) and Mr. Vish Govindasamy (appointed on 26.10.2023).
Further two new members were appointed to the board with effect from 30 Jan and 1 Feb 2024.
Mr. Manil Jayesinghe – with effect from 1 Feb 2024
Mr. Rajeev Amarasuriya – with effect from 30 Jan 2024

12. Research & Development Unit
Colombo Port January transshipment volumes growth tops 25%
The Port of Colombo experienced a significant surge in transshipment volumes, marking a
record 25.5% Year-on-Year (YoY) increase to 562,527 *TEUs in January.
This growth, observed for the second consecutive month, was attributed to ongoing disruptions at the
Red Sea, which continued to benefit the port’s operations.
In addition, the overall container throughput at the Port of Colombo saw a robust expansion, rising by
28% YoY to 691,150 TEUs in January. Transshipment volumes accounted for a substantial 81% of the
total throughput, highlighting the port’s growing importance as a transshipment hub.
Source: EDB Press
*Twenty-foot equivalent unit
A standard unit of cargo capacity used to measure the size of container ships and ports. A TEU is a 20-foot long, 8-foot wide, and 8.6-foot tall
container that can hold 9–11 pallets and up to 28 weight tons. In metric terms, a TEU is 6.10 meters long, 2.44 meters wide, and 2.59 meters high. A
40-foot container is equivalent to 2 TEU.

13. Research & Development Unit
Sri Lanka opens doors to Indian tourists with virtual Unified
Payments Interface launch via LankaQR
In a groundbreaking move aimed at enhancing the
convenience and security of digital payments for Indian
tourists in Sri Lanka, a virtual launch event marked the
introduction of the Unified Payments Interface
(UPI) transactions through LankaQR from 12 Feb 2024.
With approximately 350,000 merchants already equipped to
accept QR-based transactions, Sri Lanka is well prepared to
extend this facility to the Indian tourists.
Looking ahead, the initiative aims to rapidly expand its reach, with an estimated 10,000
merchants expected to accommodate the UPI payments for the Indian nationals within weeks of
the launch. By the end of March 2024, this number is projected to reach 65,000, encompassing a
vast network of merchants catering to the needs of the Indian tourists.

14. Research & Development Unit
IMF concludes fiscal authority capacity development mission
The International Monetary Fund (IMF)
concluded a mission (15 Feb) to extend
capacity development assistance and
training for relevant high officials in
handling fiscal issues in response to a
government request.
The mission has specially focused
attention on improving tax collection
specially the introduction of property
tax in 2025, tax administration and
bolster public finances.

15. Research & Development Unit
Sri Lanka sends revised debt proposal to Private Creditors
Sri Lanka sent a new restructuring proposal to dollar bondholders through its adviser Lazard as the
country seeks to complete overhauling its defaulted external debt. Completing the overhaul of Sri Lanka’s
USD 27bn of foreign debt is critical to ensure financing from the International Monetary Fund bailout keeps
flowing. Government said that authorities expect to complete the restructuring within the first six months
of the year.
Source: IMF Staff report of the first review
Source: Bloomberg

16. News Snippets
Research & Development Unit
Cabinet approves proposal for large-scale renewable energy projects
The Cabinet of Ministers approved a proposal put forward by the Minister of Power and Energy to
bolster the presence of large-scale renewable energy projects in the country. The approval follows a
feasibility study on offshore wind development conducted by World Bank consultants, which
identified the North, West, and South East regions of Sri Lanka as high-potential areas for large-scale
offshore wind power plants.
SL to host first-ever Chinese marathon come May
Sri Lanka will host the first-ever Chinese marathon this May, where over 2,000-3,000 Chinese athletes
will arrive under the ‘Ni Hao Zhong Guo’ programme, Sri Lanka Institute of Tourism and Hotel
Management Chairman announced.
Buddhist trail in the works to boost tourism
Tourism authorities are in the process of creating a Buddhist trail in Sri Lanka, a fresh effort towards
luring religious travellers.

17. Global
Update
Research & Development Unit

18. Spiraling ocean freight rates from Far East to US may
have peaked?
Research & Development Unit
Read more: https://www.xeneta.com/blog/red-sea-crisis-newsfeedt-benefits-humanity
The Red Sea crisis sent ocean freight rates from
the Far East to US spiraling by more than 150% but
there appears to be some relief on the horizon for
shippers.
The latest data released by Xeneta indicates a
peak may have been reached after spot rates from
the Far East into the US declined slightly since the
last round of general rate increases were
implemented at the start of February.
Into the US East Coast, the rates have fallen slightly from USD 6,260 per FEU (40ft container) on
February 01 to USD 6,100 on February 15 2024. The rates into the West Coast have declined from
USD 4,730 per FEU to USD 4,680 in the same period.
FEU/FE – Forty feet equivalent container
USEC - East Coast of USA
USWC- West Coast of USA

19. France seeks first meeting for India-to-EU infrastructure
link
Research & Development Unit
France is preparing a first meeting to
discuss an infrastructure link that would
connect India to Europe via the Middle
East .
Source: Bloomberg
President Emmanuel Macron named
Gerard Mestrallet, the former chief
executive officer of French energy utility
Engie SA, his envoy to lay the ground
work of the project.
The concept, known as IMEC – India-Middle East-Europe Corridor, aims to create a
network of railroads, ships, gas pipelines and internet cables.

20. Research & Development Unit
Source: Reuters
On January 29, 2024, a Hong Kong court ordered the liquidation of China
Evergrande Group, the world's most indebted property developer.
Evergrande, once China's largest real-estate developer, defaulted on its debt in
2021 and announced an offshore debt restructuring program in March 2022.
The liquidation ruling is likely to further jolt already fragile Chinese capital and
property markets.
The world's most indebted developer has around USD 300bn of liabilities and
USD 240bn of assets.
China’s property crisis

21. Elections – Indonesia, Pakistan, El Salvador & Finland
Research & Development Unit
Indonesian presidential election was
held on 14 Feb 2024.
Unofficial results show Prabowo
Subianto, Aged 72, winning nearly
60% of the vote – enough to avoid a
presidential runoff – with around 85%
of votes counted, according to state-
owned news organization Antara.
General election of Pakistan was held
on 08 Feb 2024
PTI-Ind which is lead by Imran Khan,
who currently serves in Jail claimed
around 32% of the votes. Despite
that, PML (Pakistan Muslim League)
which is lead by Ex PM Nawaz Sharif
and PPP (Pakistan People’s Party)
which is lead by Mr Bilawal Bhutto
Zardari have agreed to form a
coalition government.
El Salvador President Nayib Bukele has declared himself
the winner of national elections that revolved around the
trade-off between security and democracy. Bukele claimed
to have won more than 85% of the vote despite electoral
authorities not yet releasing the official results.
Former Prime Minister Alexander Stubb has won the run-off election (51.6%) against ex-Foreign
Minister Pekka Haavisto (48.4%) to become Finland’s next president, and to take on the task of
steering the Nordic country’s foreign and security policy now that it is a member of NATO.
Source: Aljazeera
Source: Aljazeera
Source: CNBC
Source: Guardian

22. News Snippets
Research & Development Unit
America’s annual inflation rate slowed to 3.1% in
January 2024. Although that was down from the
3.4% recorded in December, the dip was smaller
than had been expected.
The economies of Japan and Britain fell into recession at
the end of 2023. Japan’s GDP unexpectedly shrank by 0.1%
in the fourth quarter compared with the third. In July to
September it contracted by 0.8%. Japan has now slipped
from being the world’s third- to fourth-largest economy.
British GDP was 0.3% smaller in the fourth quarter, after
shrinking by 0.1% in the third.
Traders in Britain seemed to be more optimistic about a cut
to interest rates there when inflation came in at 4% for
January 2024, below forecasts.
Argentina’s inflation rate surged to 254% in
January from 211% in December 2023, when it
overtook Venezuela as the country with the
highest price rises in Latin America.
India could become the world’s third-largest economy by 2027 with a gross domestic product of USD 5tn, the
finance ministry has said. In a report released, the finance ministry said the economy is poised to grow at or
above 7% in the fiscal year 2024. India’s fiscal year starts on April 1 and ends on March 31. If it meets this year’s
target, it will be the third straight year of 7% GDP growth for India. The country’s GDP currently stands at USD
3.7tn.
Sources: The Economist, CNBC, U.S. Bureau of Labor Statistics, Office for National Statistics -UK

23. The views expressed in Economic Capsule are not necessarily those of the Management of Commercial Bank of Ceylon PLC
The information contained in this presentation has been drawn from sources that we believe to be reliable. However, while we have taken reasonable care to maintain
accuracy/completeness of the information, it should be noted that Commercial Bank of Ceylon PLC and/or its employees should not be held responsible, for providing the
information or for losses or damages, financial or otherwise, suffered in consequence of using such information for whatever purpose.
< Research & Development Unit >
Sri Lanka: Emerging from the economic crisis…
“If we become complacent and go slow on reforms, we can
easily be back in a crisis where we are unable to pay our debts.
Except next time, the adjustment would be far more painful
because we would have already restructured domestic and
external debt. More of the adjustment therefore will fall on our
citizens and less on external creditors. This point needs to be
widely understood.”
-Dr Sharmini Coorey : Advisor to President and former IMF Director