Reserves grow by 2.5% in April

Gross official reserves grew by US$ 169 million during the month of April 2013 to US$ 6,858 million, up 2.52 percent from US$ 6,689 million in March, data released by the Central Bank yesterday (24) showed.

The reserves were lower by US$ 19 million since reaching US$ 6,877 million as at end December 2012. As at end December 2012, debt and short term inflows amount to 95 percent of reserves. Total government borrowing alone, at US$ 5,256.9 million, amounted to around 76.44 percent of reserves, as at end December 2012.

"Sri Lanka’s external sector made satisfactory progress in April 2013 with an increase in inflows being recorded in the balance of payments (BOP)," the Central Bank said yesterday.

Worker remittances grew 6.4 percent to US$ 2.1 billion during the first four months of this year, from US$ 1.98 billion a year earlier.

Earnings from tourism grew 19.8 percent to US$ 407.2 million from US$ 339.8 million a year ago.

Inflows to commercial banks amounted to US$ 664 million during the first four months of this year with no inflows recorded for the corresponding period a year ago.

Portfolio inflows fell to US$ 69.4 million during the four month period from US$ 171.5 million last year.

Inflow to Treasury bills and bonds reached US$ 1.58 billion, up 62.6 percent from US$ 973 million a year ago and long term loans to the government fell by a marginal 0.4 percent to US$ 546.1 million, from US$ 548.1 million a year earlier.

"Earnings from tourism continued to grow with increasing recognition of Sri Lanka as an attractive tourist destination. Workers’ remittances continued to rise, supported by the diversification of migrant destinations and further expansion of formal channels for remitting money. Foreign investment at the Colombo Stock Exchange (CSE) continued to grow, along with increased activity at the CSE, indicating a gradual build-up of investor confidence.

Commercial banks and the corporate sector were able to raise more foreign capital, given the improvement in the macroeconomic environment and further relaxation of exchange control regulations. Inflows on account of long-term loans obtained by the Government during the first four months of the year moderated, while substantial inflows were recorded in the government securities market on a cumulative basis," the Central Bank said.

"Remittances have approximately doubled over the last five years, reflecting high growth of overseas workers, but this has been unable to compensate fully for the poor trade performance. At the same time, FDI inflows have been relatively subdued, and low by regional comparison, and consequently the current account deficit has been financed mainly through debt-creating flows," the International Monetary Fund (IMF) in a recent country report on Sri Lanka.

The IMF said Sri Lanka’s various tax concessions and tax holidays have resulted in a decline in revenue and failed to enhance foreign direct inflows (FDI).

animated gif
Processing Request
Please Wait...