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1. EconomicCapsule
January 2024
Research & Development Unit
324th Issue

2. CONTENTS
BANKING & FINANCE
 ComBank unveils evolved logo, symbolizing commitment to sustainability
 ComBank enhances functionality and versatility of eSlip app with upgrade
 ComBank wins Platinum for Jaffna branch at Green Building Council Awards
ECONOMY, BUSINESS & DEVELOPMENT
 IMF visits Sri Lanka
 CBSL – Annual Policy Statement 2024
 CBSL – Monetary Policy review : January 2024
 Tourist arrivals – First 18 days of Jan 2024
 Private sector credit improving
 JICA-EDB to introduce Sri Lankan ICT companies to Japanese market
 Greater collaboration with India
 News Snippets
GLOBAL UPDATE
 AI could impact 40% of jobs across the world: IMF cautions
 Int’l tourism to reach pre-pandemic levels in 2024: UNWTO
 Red Sea attacks
 China’s largest oil supplier in 2023 was Russia
 American big banks in 2023
 News Snippets
Research & Development Unit

3. Banking & Finance
News
Research & Development Unit

4. Research & Development Unit
ComBank unveils evolved logo, symbolising commitment to
sustainability
The Commercial Bank of Ceylon has begun
2024 by underlining its commitment to
sustainability – symbolically as well as
literally.
The instantly- recognizable Commercial Bank logo in blue
will hereafter also feature a green element, representing
the Bank’s multifaceted commitment to sustainability,
encompassing diversity, inclusivity, good governance,
transparency, social equity, accountability and eco-
friendly banking solutions.

5. Research & Development Unit
ComBank enhances functionality and versatility of eSlip app with
upgrade
The Commercial Bank of Ceylon has
unveiled a series of new features to the
Bank’s ‘e-Slip’ app.
New features of the app
• A new ID document verification feature enables the app to check
NIC numbers to verify whether a customer has an existing
relationship with the bank.
• The introduction of an ‘eSlip Groups’ feature makes it possible for users of the app to create groups of up to 10
eSlips under a single QR code.
• Enabling eSlip users to generate PDF receipts of all completed eSlip transactions and share them across mobile
device-supported social media channels such as WhatsApp, Email and Viber.

6. Research & Development Unit
ComBank wins Platinum for Jaffna branch at Green Building
Council Awards
The Jaffna branch of the Commercial Bank
of Ceylon has been awarded a Platinum
rating by the Green Building Council of Sri
Lanka (GBCSL), according it the highest
available award in Sri Lanka for Green
Buildings.
The accolade was presented at the 2023 awards of the GBCSL, at which Commercial
Bank also received an “Honourable Mention” in the Banking Sector for the Council’s
Green Business Leadership Award 2023.

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

8. Research & Development Unit
IMF visits Sri Lanka
Highlights of the IMF visit which was concluded on 19 January 2024
- The economic reform program implemented by the Sri Lankan
authorities is yielding the first signs of recovery with positive real GDP
growth in the third quarter of 2023, low inflation, increased revenue
collection, and a build-up of external reserves.
- Staying the course on the reform agenda is necessary for this
stabilization to evolve into broad-based and stable growth that will
ensure a full and lasting economic recovery benefitting the people.

9. Research & Development Unit
IMF visits Sri Lanka (Cont.)
-The Fund expects Sri Lanka to reach agreements in principle with both
official and commercial creditors by the next review. (IMF team is
scheduled to visit Sri Lanka in March-April 2024 and the completion of
the second review is expected within approximately two months.)
-Calls for swift progress towards introduction of progressive property
tax, strengthening tax administration, removing tax exemptions and
actively eliminating tax evasion.
Highlights of the IMF visit which was concluded on 19 January 2024 (Cont.)

10. Research & Development Unit
IMF visits Sri Lanka (Cont.)
-SL should continue rebuilding external buffers through strong reserve
accumulation.
-Insists protecting the poor and the vulnerable through improved
targeting and better coverage of cash transfers as critical.
-Progress in meeting key commitments under the IMF-supported
program will be formally assessed in the context of the second review of
the Extended Fund Facility (EFF) arrangement alongside the forthcoming
2024 Article IV consultation assessing Sri Lanka’s economic health.
Source: IMF
Highlights of the IMF visit which was concluded on 19 January 2024 (Cont.)

11. Research & Development Unit
CBSL – Annual Policy Statement 2024
CBSL released its Annual Policy Statement on 10 January 2024.
The report addresses CBSL’s Monetary and Financial sector policies for 2024 and
beyond.
Source: https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/about/annual_policy_statement_20240110_monetary_and_financial_sector_policies_for_2024_and_beyond_e.pdf
Highlights
Monetary policy actions would aim at maintaining CCPI based headline inflation at 5% as agreed with the
Government under the Monetary Policy Framework Agreement.
Central Bank would consider moving towards a single policy interest rate mechanism, instead of the existing dual
policy interest rates, to improve the monetary policy transmission and signaling effect of the monetary policy stance
CBSL to consider gradually removing restrictions on the standing facilities which were imposed during the crisis.
The Banking (Amendment) Bill is expected to be passed in Parliament in early 2024. The legal and regulatory
framework of licensed banks is to be further strengthened through the proposed amendments to the Banking Act
- Key amendments proposed include strengthening minimum licensing requirements, corporate
governance, shareholder suitability, subsidiarisation of foreign banks, as deemed necessary, bank
ownership, acquisitions, mergers and consolidation, disposal of non-financial subsidiaries, consolidated
supervision, accounts and audit, proportionality, large exposures, and related party transactions.

12. Research & Development Unit
CBSL – Monetary Policy review : January 2024
Source: https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/press/pr/press_20240123_Monetary_Policy_Review_No_1_2024_e_Ge643v.pdf
CBSL in its latest Monetary Policy review maintained policy rates at current levels. Following are the key highlights
regarding the medium term macroeconomic outlook .
Inflation
Headline inflation is projected to record an upward
movement in the near term.
Reasons for this
• Domestic price adjustments due to the increase in
the Value Added Tax (VAT)
• Elimination of certain VAT exemptions effective
01 January 2024,
• Disruptions to the domestic food supply
• Dissipation of the favorable statistical base
effect.
However, this acceleration in inflation is expected
to be short-lived, and the spillover effects of these
one-off adjustments are likely to be muted due to
subdued underlying demand conditions.

13. Research & Development Unit
CBSL – Monetary Policy review : January 2024 (Cont.)
Domestic economic activity
The rebound in domestic economic activity is expected to be sustained, supported by
• The faster pass-through of relaxed monetary policy to broader market interest rates and the resultant firming
of credit demand,
• Improvements in business and investor sentiments
• Improvements in supply conditions
• Gradual rebound expected in external demand conditions
Interest rates
There is further space for market interest rates to decline in
the period ahead, in line with the reduction in policy interest
rates effected in the recent past.
Expansion in credit to the private sector is expected to be
sustained in the period ahead, supported by further easing
of monetary conditions.

14. Research & Development Unit
Tourist arrivals – First 18 days of Jan 2024
The tourist arrivals to Sri Lanka for
the first 18 days of January 2024
crossed the 121,000 mark. (121,446)
Top ten source markets
(Jan 1-18 2024)
Comparatively, in January 2023, total
monthly tourist arrivals were
102,545.
Source: SLTDA

15. Research & Development Unit
Private sector credit improving
Sri Lanka seems to be embarking on a new
credit cycle, following almost two years of
contraction, as the commercial banks are
signaling their preparedness to resume
robust lending, aligning with the
improving financial conditions.
Source: CBSL
The commercial banks had collectively extended their outstanding private sector credit by a relatively robust
Rs.62.9bn in November, picking up from a Rs.37.9bn growth in October 2023 (Please see graph).

16. Research & Development Unit
JICA-EDB to introduce Sri Lankan ICT companies to
Japanese market
The Export Development Board (EDB) has
solidified its commitment to advancing the
ICT BPM sector by establishing a strategic
partnership with the Japan International
Cooperation Agency (JICA).
The approval of the partnership was received from the JICA, with the agreement to extend the Japanese
technical assistance for Sri Lankan tech companies by introducing the Sri Lankan ICT/BPM companies to
the Japanese market.
The project aims to assist approximately 30 SME ICT/BPM companies and tech start-ups in two cohorts
over a two-year period, starting in 2024, by providing market intelligence, business coaching and
matchmaking support.
Source: EDB Press

17. Research & Development Unit
Greater collaboration with India
• The President welcomed private investments, particularly in
infrastructure development and the divestment of state-owned
enterprises.
• Lucrative opportunities for potential investors were highlighted in
key sectors such as telecommunications, financial services, and
energy .
Collaborative efforts with India on renewable energy projects,
focusing on offshore wind and solar sources, underscores the
commitment to sustainable energy solutions.
Highlights from the recent meeting between SL president and Indian investors held in Davos

18. Research & Development Unit
Greater collaboration with India (Cont.)
• Opportunities in supply chain efficiency, healthcare, and consumer
products were also discussed.
• Bilateral trade and economic engagement were central themes, with
plans outlined for liberalizing trade in goods and services, customs
cooperation and trade facilitation with India.
• The emphasis on technology cooperation and use of the Indian rupee
for trade settlement reflects a commitment to strengthening economic
ties. Sri Lanka’s vision also extends to tourism and people-to-people
connectivity, fostering cultural and educational collaborations.

19. News Snippets
Research & Development Unit
Comprehensive Sri Lanka Tourism app to
go live by end-1Q24
Sri Lanka’s tourism industry is gearing up
to receive a fresh boost, as the highly
anticipated all-inclusive Sri Lanka Tourism
app is expected to go live by 1Q24.
The Cabinet nod was received recently to
reactivate the initiative, which was initially
approved in 2019.
Forbes names scenic SL 4th top solo travel destination for 2024
Sri Lanka has been listed as the fourth-most popular destination for solo travellers in 2024 by Forbes.
“After a tumultuous few years, Sri Lanka has made a big comeback and its iconic upcountry train
routes are a major part of its appeal.” the magazine said.
Hambantota Port fastest growing RO-RO transshipment
port
The Hambantota International Port (HIP) on December 30,
2023 proved itself as the fastest growing RO-RO
transshipment port in the region.
With 700,000 transshipment vehicles handled, the port
marked a significant 26% increase from 2022 figures. The
milestone figure was achieved with Glovis vessel MV. HAE
SHIN V.003B handling 3626 units for transshipment to
Ulsan port, South Korea, the port said.

20. Global
Update
Research & Development Unit

21. AI could impact 40% of jobs across the world: IMF
cautions
Research & Development Unit
Read more: https://www.imf.org/en/Blogs/Articles/2024/01/14/ai-will-transform-the-global-economy-lets-make-sure-it-benefits-humanity
The boom in technology is taking the world by storm but millions of employees are at risk as artificial
intelligence (AI) is expected to affect almost 40% of jobs around the world, the International Monetary
Fund (IMF) cautioned.
“The rapid advance of AI has captivated
the world, causing both excitement and
alarm and raising important questions
about its potential impact on the global
economy.
The net effect is difficult to foresee, as
AI will ripple through economies in
complex ways. What we can say with
some confidence is that we will need to
come up with a set of policies to safely
leverage the vast potential of AI for the
benefit of humanity,”
- IMF Chief Kristalina Georgieva

22. Int’l tourism to reach pre-pandemic levels in 2024:
UNWTO
Research & Development Unit
According to the first UNWTO World
Tourism Barometer of the
year, international tourism ended 2023
at 88% of pre-pandemic levels, with an
estimated 1.3 billion international
arrivals.
Full report: https://www.unwto.org/news/international-tourism-to-reach-pre-pandemic-levels-in-2024
The unleashing of remaining pent-up demand,
increased air connectivity, and a stronger recovery
of Asian markets and destinations, are expected to
underpin a full recovery by the end of 2024.
International Tourist Arrivals (% change over 2019)

23. Red Sea attacks
Research & Development Unit
Attacks by Iran-backed Houthi
militants on ships in the Red Sea have
already rocked global trade.
And there could be more disruptions and
price increases to come for shipments of
goods and fuel.
Source: CNBC
Several major shipping lines and oil transporters have suspended their services through the Red Sea.
Also, the attacks have already pushed ocean freight costs higher.
It could get even more expensive as major companies avoid the Suez Canal, which feeds into the Red
Sea, and opt instead to go around Africa to get to the Indian Ocean.

24. Research & Development Unit
Source: CNN- Business
Russia surpassed Saudi Arabia to become China’s
largest oil supplier in 2023, according to the latest
Chinese customs data.
China imported a record amount of bargain-priced
Russian oil last year, taking advantage of Moscow’s
desperate search for new buyers amid Western
sanctions following the Kremlin’s 2022 invasion of
Ukraine.
China’s largest oil supplier in 2023 was Russia
The volume of Russian crude shipped to China jumped 24% in 2023 to 107.02
million metric tons, compared to 2022, according to data.
Russia now accounts for 19% of China’s oil imports, while Saudi Arabia makes
up 15%.

25. American big banks in 2023
Research & Development Unit
America’s big banks reported a mixed bag of earnings.
Source: Financial Reports of respective banks

26. News Snippets
Research & Development Unit
China’s economy grew by 5.2% in 2023,
just above the government’s target of 5%.
However, the figure is a comparison with
the low base of 2022, when GDP expanded
by just 3% because of pandemic
restrictions. China’s population also fell in
2023 for the second year, by 2m people to
1.409bn
Consumer prices in the US rose in December, driven by higher costs
for housing, dining out and car insurance. Inflation hit 3.4% in
December 2023, the Labour Department said.
German GDP was 0.3% smaller in 2023 than the previous year, as
higher prices hit household consumption and trade. The economy
may have avoided a recession in the second half of the year.
Britain recorded an unexpected rise in inflation. The annual rate rose to 4% in December, the first increase in
ten months. Coming after a surprise increase in America’s inflation rate (to 3.4% in December) and a rise in the
euro zone’s (to 2.9%) investors are pushing back their estimates of when central banks will cut interest rates.
Christine Lagarde, president of the European Central Bank, hinted this week that the ECB won’t start reducing
rates until the middle of 2024.
Argentina has announced that it will not join the BRICS bloc of developing economies, fulfilling a campaign
promise by newly elected far-right President Javier Milei who has pledged to pursue closer ties with the West.
Oil prices settled lower on 23 Jan as traders focused on rebounding crude output in parts of the U.S., along with
rising supply in Libya and Norway, rather than risks to supply posed by conflict in Europe and the Middle East.
Brent crude settled at USD 79.55 a barrel.

27. 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…
“I believe, our fundamental problem is poor governance and
that, unless we address governance problems head on, we
would never durably overcome our economic problems and
prosper.”
-Dr Sharmini Coorey : Advisor to President and former IMF Director