This supplement to the staff report summarizes the main developments since the staff report was issued on April 15. Staff projections and the thrust of the staff appraisal remain unchanged.
Revised balance of payments data indicate a stronger current account position in 2014. Due largely to stronger net services receipts, the overall current account deficit is now estimated by the authorities to be 2.7 percent of GDP.
Headline year-on-year inflation declined to 0.1 percent in March 2015, from 0.6 percent in February, but core inflation increased from 0.8 percent to 1.4 percent.
The continued decline in headline inflation reflects primarily the impact of downward price revisions of domestic energy prices as well as the administered reduction in prices of a number of consumer items.
The Central Bank of Sri Lanka (CBSL) Monetary Board reduced policy interest rates by 50 basis points, effective April 15. Accordingly, the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the CBSL were reduced to 6 percent and 7.5 per cent, respectively.