www.combank.lk

1. Economic Capsule
December 2022
Research & Development Unit
311thIssue

2. CONTENTS
BANKING & FINANCE
 ComBank wins Oscar-equivalent ‘Bank of the Year’ award from ‘The Banker’- UK
 ComBank named ‘Strongest Bank in Sri Lanka in 2022’ by Asian Banker
 ComBank launches maturity-based foreign currency investment plan
ECONOMY, BUSINESS & DEVELOPMENT
 FDIs into Sri Lanka stay robust amid challenges
 Draft Monetary Law Act gets Cabinet approval
 World Bank approves SL’s eligibility to access concessional financing
 Sri Lanka seeks USD 850mn loan from India, Japan, Singapore
 Sri Lanka confident to onboard China this month for debt restructuring
 November’22 tea production marginally up
 Changes in S&P SL 20 index
 Cabinet approval to teach economics to politicos and bureaucrats
 News Snippets
GLOBAL OUTLOOK
 “Expansion of renewable energy will happen much faster over the next
five years” – IEA
 Covid Pushes China Business Confidence to Lowest in a Decade
 EU approves measure to limit natural gas prices in effort to combat energy
crisis
 Global News Snippets
 Global Economic Indicators
 The world in 2023 – Which countries will top economic growth charts?
Research & Development Unit

3. Banking &
Finance

4. Research & Development Unit
ComBank wins Oscar-equivalent ‘Bank of theYear’ award
from ‘The Banker’- UK
The Commercial Bank of Ceylon was crowned Sri Lanka’s ‘Bank
of the Year’ by the respected ‘The Banker’ magazine of the UK,
the Oscar equivalent of the banking fraternity.
This is the 12th occasion that Commercial Bank has won this coveted
award which is presented in recognition of the Bank’s ability to deliver
returns, gain strategic advantage and serve the market while being
regarded as the industry standard for banking excellence.
‘The Bank of the Year’ title is conferred upon financial institutions
excelling in growth and performance, strategic initiatives, innovation in
technology, new or upgraded products and services, and other
noteworthy achievements in the field.

5. Research & Development Unit
ComBank named ‘Strongest Bank in Sri Lanka in 2022’ by
Asian Banker
The Commercial Bank of Ceylon was proclaimed the
‘Strongest Bank in Sri Lanka’ in 2022 by Asian Banker, a
leading platform in the Banking and Financial Services
industry.
The Bank received this ranking based on the strength of its balance
sheet, following a rigorous quantitative assessment of the financial
performance of banks in the Asia Pacific region.
The evaluation comprised of six crucial indicators weighted by their
relative importance.
These included the scale of the Bank’s assets relative to gross domestic product (GDP), balance sheet
growth of net loans and deposits, risk management of the bank’s operations, profitability and
sustainability, strength and credibility of loans disbursed, and liquidity of assets to meet adverse events
requiring cash outflow.

6. Research & Development Unit
ComBank launches maturity-based foreign currency
investment plan
The Commercial Bank of Ceylon announced the launch of a unique investment plan that enables Sri
Lankans earning foreign currency to save fixed monthly amounts and enjoy attractive interest rates to
build savings of USD 10,000 upwards or the equivalent in three other currencies, in a relatively short
period.
Features
• Investment plans can be opened in USD, EUR, GBP & AUD.
• Investment period, spanning from 3 to 5 years would be at
your choice
(Subject to a minimal agreed monthly deposit).
• You can target an investment of 10,000/-, 25,000/-, 50,000/-,
100,000/- & 250,000/- in aforementioned currencies.
• You will be able to get an instant loan up to a maximum of 75%
of the account balance.
• You can appoint a nominee.
Named ‘Millionaire Investment Plan in Foreign Currency,’ the account is modelled on the Bank’s already
successful ‘Millionaire Investment Plan’ and offers interest rates that are higher than competing
products in the market for tenures of three, four or five years on savings in US Dollars, Euros, Sterling
Pounds and Australian Dollars.
Amounts shown below are the ‘Monthly Deposit’ to be made for a ‘Target Amount’ of
10,000 in USD, EUR, GBP & AUD.

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

8. Research & Development Unit
FDIs into Sri Lanka stay robust amid challenges
The Board of Investments (BOI) has attracted foreign direct investment (FDI) at record levels
notwithstanding a spate of global and local volatilities with total FDI inflows amounting to
USD713mn in the first nine months of 2022, which is 71% of the 2022 full-year target of USD 1
bn.
Further, as of the first eleven months, BOI has inked a total of 123 agreements to the value of
USD 1.9bn, which consists of USD 1.5bn in new projects and USD 400mn in expansions.
New projects are from countries such as India, Japan, Norway, Hong Kong, the UK, the USA,
and Singapore.
Out of 41 new projects, the majority are for the manufacturing sector including apparel
followed by ICT, Tourism, Infrastructure, Utilities, Services, and Agriculture sectors while most
of the expansions of existing projects are from the manufacturing sector including apparel
followed by logistics, telecommunication, ICT and Agriculture sectors.
Source: BOI – Sri Lanka

9. Research & Development Unit
Draft Monetary Law Act gets Cabinet approval
The Cabinet of Ministers green lighted the draft of the new Monetary Law Act clearing the only
remaining prior action required by the International Monetary Fund (IMF) to unlock its
USD 2.9bn rescue package.
A Bill containing the draft Monetary Law, which will govern the functions of running the
country’s Central Bank was presented to the Cabinet of Ministers for approval.
In November 2022, Central Bank Governor, Dr. Nandalal Weerasinghe said the passage of the
new Monetary Law Act remains the only prior action as part of the broader reform package
agreed with the IMF under the staff deal which was entered into in early September.
The new Monetary Law Act will strengthen Central Bank’s independence, which is paramount to
prevent fiscal dominance over monetary policy. It will enable the Central Bank to deliver on price
stability, one of its two key mandates.

10. World Bank approves SL’s eligibility to access concessional
financing
Research & Development Unit
The World Bank has approved Sri Lanka’s
request to access concessional financing
from the International Development
Association (IDA).
Source: World Bank
According to the agency, this type of financing, which is offered at low interest rates,
will enable the country to implement its government-led reform program to stabilize
the economy and protect the livelihood of millions of people facing poverty
and hunger.
Read more : https://www.worldbank.org/en/news/press-release/2022/12/05/world-bank-approves-sri-lanka-s-eligibility-to-access-concessional-financing-to-help-stabilize-the-economy

11. Sri Lanka seeks USD 850mn loan from India, Japan,
Singapore
Research & Development Unit
Sri Lanka is seeking funds from India,
Japan, Singapore or some other donor
agency totalling USD 850mn as bridging
finance until the proposed IMF facility is
approved in the New Year, Finance
Ministry sources disclosed.
Talks are underway with these parties to get funds for a short period of six months.

12. Research & Development Unit
Sri Lanka confident to onboard China this month for debt
restructuring
Sri Lanka, by end of this month, is hoping to get China’s approval for debt restructuring, Dr. Nandalal
Weerasinghe, Governor Central Bank told in an economic forum.
Speaking at the Sri Lanka Economic Summit 2022 by the Ceylon Chamber of Commerce themed
‘Resetting from Turmoil to Opportunity’, he said that if China gives its assurance in December, Sri Lanka
expects to receive the International Monetary Fund (IMF) Board’s approval for financial assistance by
next month (Jan-2023).
But the priority is to get a compromise with Sri Lanka’s creditors on their support for debt restructuring.
“We are currently engaged in obtaining their assurances. We have seen considerable progress in this
regard. ” Dr. Weerasinghe said.
Discussions with China on debt restructuring were delayed due to the 20th National Congress of the Chinese
Communist Party (16-22 Oct ‘22), he said noting that these talks will be expedited, now that the congress has
ended.

13. November’22 tea production marginally up
Research & Development Unit
Sri Lanka’s tea production for the month
of November saw a marginal
improvement, as the total output grew
marginally by 1.2% when compared with
the November 2021 quantities.
According to the data released by the Sri
Lanka Tea Board, the November 2022
tea production totaled 20.24Mn Kgs,
which is a 0.24Mn Kg increase from the
November 2021 output.
The analysis showed that the High and Low Grown elevations had shown some gain,
while the Medium Growns had recorded a decline over the corresponding month of
2021
Source: Sri Lanka Tea Board

14. Changes in S&P SL 20 index
Research & Development Unit
The Colombo Stock Exchange (CSE)
announced changes in the S&P Sri
Lanka 20 index constituents made
by S&P Dow Jones Indices at the
2022 year-end rebalance.
Exclusions Inclusions
Dialog Axiata PLC Browns Investments PLC
Hela Apparel Holdings PLC Brown & Co. PLC
Hemas Holdings PLC CIC Holdings PLC
LB Finance PLC Richard Pieris & Co. PLC
The exclusions and inclusions, as announced by S&P Dow Jones Indices,
are effective from December 19, 2022 (after the market close of
December 16, 2022).
Source: CSE

15. Cabinet approval to teach economics to politicos and
bureaucrats
Research & Development Unit
The Cabinet nod has been granted to establish ‘Sri Lanka Institution of Economics and Trade
Institute’ to educate policymakers and public officials on economic and trade activities in order
to avert another economic crisis fueled by fiscal instability.
Although, the Fiscal Management Responsibility Act (FMRA) came into effect in 2003,
successive governments failed to comply with the key fiscal rules while amending the Act three
times after failing to meet fiscal rules.
As parliament has full control over public finances, it is essential for policymakers and public
officers to get training on economic and trade activities so that entering into decisions with
understanding is possible when formulating national policies and implementing them.

16. News Snippets
Research & Development Unit
Govt. plans to restart suspended Japanese-funded LRT
project
In an effort to mend fences with Japan, the Sri Lanka
government plans to resume the Japan International
Cooperation Agency (JICA)-funded USD 2.2bn ‘Light Rail
Transit (LRT) project, stretching from Malabe to Colombo Fort
Presidential Secretariat sources divulged.
The new administration is set to renew the LRT project
contract with JICA loan facility due to its favourable conditions
including low interest rates and the grace period of 12 years.
Numbers fall in tourism; 2022 target unlikely
Sri Lankan hoteliers are struggling to sell their
rooms as the industry is back to seeking out
moratoriums and Sri Lanka is destined to miss
the 800,000 arrivals expectation for this year.
“We expected to achieve much more but
unfortunately things didn’t happen the way we
expected,” Hoteliers Association President told.
IMF to engage with CB on macroeconomic modeling.
A technical team from the International Monetary Fund (IMF) will be visiting Colombo shortly to work with the
Central Bank on macroeconomic modeling and forecasting relating to Sri Lanka’s economic program supported by
them, the IMF sources said. In this context, a special meeting was convened at the Central Bank by the IMF Country
Representative with a group of journalists to seek their inputs on the most effective way to communicate complex
economic policy-making issues.

17. Global
Update
Research & Development Unit

18. “Expansion of renewable energy will happen much faster
over the next five years” – IEA
Research & Development Unit
The International Energy Agency (IEA) said that the expansion
of renewable energy will happen at a much faster rate over the next five
years than was thought likely a year ago, and that Russia’s war in Ukraine
marks a “turning point” for the transition to clean energy in Europe.
It forecast that renewable as a whole will overtake coal in 2025 to become
the biggest source of the world’s electricity generation. Half of the new
renewable capacity will be in China.
Source: Economist

19. Covid Pushes China Business Confidence to Lowest in a
Decade
China’s business confidence dropped to
its lowest in nearly a decade, a recent
survey showed, pointing to the impact of
rapidly rising Covid-19 cases on the
country’s economic activity.
The index dropped from 51.8 in
November to 48.1 in December,
according to a survey of sales managers
at over 2,300 companies, conducted
between December 1 and 16 2022.
This was the lowest level since the
survey began in 2013.
Research & Development Unit
Source: CNBC
COVID Statistics - China
China relaxed certain COVID restrictions in early December only to witness a surge in infections.
(Recent reports revealed on 18th Sunday that fever clinics in Beijing city saw 22,000 visits – up 16
times from a week ago .)

20. EU approves measure to limit natural gas prices in effort
to combat energy crisis
Research & Development Unit
European Union energy ministers agreed to a
“dynamic” cap on natural gas prices after
two months of intense negotiations.
Introducing a limit on gas prices has proved
controversial for European officials. While
many EU member states have argued that
the measure is essential to bring down sky-
high energy costs for consumers, others have
worried about the potential market
implications of the policy. Source: Yahoo finance, Bloomberg-Economics

21. Global News Snippets
Research & Development Unit
The Bank of Japan slightly loosened the shackles on its 10-year yield target and said it will review the operation of
its *yield-curve control policy, surprising financial markets and sending the yen sharply higher. (* Yield curve control
(YCC) involves targeting a longer-term interest rate by a central bank, then buying or selling as many bonds as
necessary to hit that rate target.)
Source: Economist, Fed Reserve, ECB
The Federal Reserve raised its benchmark interest rate by half a percentage point (0.50%) on 14 Dec, taking it to a
target range of 4.25% to 4.5%. The half-point increase follows four consecutive rises of three-quarters of a
percentage point (0.75%). The central bank has eased the pace of tightening as it balances the need to tame soaring
consumer prices with ensuring that the economy is not plunged into a recession.
The European Central Bank and the Bank of England also raised their key rates by half a percentage point (0.50%)
on 15 Dec and outlined plans to shrink their bloated balance sheets in future, hoping that higher borrowing costs
will finally arrest runaway inflation.
Oil prices were little changed on Wednesday (21) as a larger-than-expected draw in U.S. crude stocks
offset worries about rising COVID-19 cases in top oil importer China. Brent crude futures rose 8 cents
from the previous day, or 0.1%, to USD 80.07 per barrel on Wednesday (21).

22. Global Economic Indicators
Research & Development Unit
Country/
Region
Quarterly GDP
%
(YoY)
Inflation (%) Unemployment
(%)
Interest rates %
(% change from last year) –
10Y govt. bond
Exchange rate-Per USD
(year on year change %)
USA 1.9 (Q3) 7.1 (Nov) 3.7 (Nov) 3.6 (+2.13) -
China 3.9 (Q3) 1.6 (Nov) 5.7 (Nov) *2.7 (+0.03) 6.94 (-8.3)
Japan 1.5 (Q3) 3.8 (Oct) 2.6 (Oct) 0.0 (-0.08) 135 (-15.7)
UK 2.4 (Q3) 10.7 (Nov) 3.7 (Oct) 3.4 (+2.60) 0.81 (-6.3)
Canada 3.9 (Q3) 6.9 (Oct) 5.1 (Nov) 2.9 (+1.45) 1.36 (-5.3)
India 6.3 (Q3) 5.9 (Nov) 8.0 (Nov) 7.3 (+9.20) 82.5 (-8.0)
EU 2.3 (Q3) 10.0 (Nov) 6.5 (Oct) 2.0 (+2.30) 0.94 (-5.6)
Turkey 3.9 (Q3) 84.4 (Nov) 9.9 (Oct) 10.9 (-9.43) 18.6 (-22.8)
Argentina 6.9 (Q2) 88.0 (Oct) 6.9 (Jun) n/a 172 (-40.9)
Source: Economist
* 5 Year govt. bond

23. The world in 2023 – Which countries will top economic
growth charts?
Research & Development Unit
Source: EIU
Guyana will be the world’s fastest growing economy in 2023, expanding by 30%, as it steps up oil
and gas development to cash in on buoyant markets .
Libya (15%) comes second: it, too, will benefit from rising oil revenue if political stability is
restored.
Venezuela (9.3%) is a surprising number three. After years of depression, it is showing signs of a
tepid revival.
Anguilla (9.2%), Maldives (8.5%) and Samoa (7.5%) will prosper from a rebound in tourism as
covid subsides.
Others in the top ten include Rwanda (7.1%), Ivory Coast (7.0%) and Senegal (7.0%), the first
helped by infrastructure development and the latter two by rising output.
Vietnam (7.0%), a whizz at labor-intensive manufacturing, is a perennial top ten performer.

24. 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.
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