Wednesday, 4 December 2013 00:00
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The Central Bank yesterday listed the degree of robust inflows to the country, reaffirming their continuity. Following are some of the highlights:
Earnings from tourism in the services account of the BOP
Tourist arrivals grew at a rate of 27.9%, year-on-year to 102,805 in October 2013. Accordingly, tourist arrivals during the first 10 months of the year amounted to 904,015 recording a year-on-year growth of 16.8%.
Earnings from tourism recorded a year-on-year growth of 26% during the first 10 months of 2013 to $996.2 million, compared to the cumulative earning of $790.5 million during the corresponding period of 2012.
The top five sources of tourist arrivals in October 2013 were India, UK, Middle East, Germany and Maldives, accounting for about 50% of tourist arrivals during the month.
Current transfers in the BOP
Workers’ remittances increased by 14.8%, year-on-year, to $599.6 million in October 2013 from $522.1 million in October 2012. The cumulative inflow from workers’ remittances increased by 11.8% to $5,521.9 million during the first 10 months of 2013 from the corresponding period of 2012.
The growth in remittances continues to be driven by increased labour migration in the professional and skilled categories.
Capital and financial account of the BOP
FDI inflows during the first nine months of 2013 increased by 42% to $870 million from $614.7 million in the corresponding period in 2012. During the first 11 months of 2013, the CSE received net foreign inflows of $176.5 million, while net inflows to the Government securities market amounted to $506 million.
Long-term loans obtained by the Government during the first nine months of 2013 amounted to $1,302 million, compared to $2,450 million obtained by way of long-term loans during the corresponding period in 2012.
Meanwhile, inflows to Licensed Commercial Banks (LCBs) and Licensed Specialised Banks (LSBs) amounted to $1,548.3 million by end October 2013, of which $850 million form the proceeds of bond issuances of LSBs.
Overall BOP position
During the period from January to October 2013 the overall BOP is estimated to have recorded a surplus of $749 million compared to a deficit of $185 million recorded during the corresponding period of 2012. This improvement in the overall BOP was achieved despite the challenging global economic conditions during the year.
International reserve position
Sri Lanka’s gross official reserves amounted to $7.1 billion by end October 2013, while total international reserves, which include foreign assets of commercial banks, amounted to $8.5 billion. In terms of months of imports, gross official reserves and total international reserves were equivalent to 4.5 and 5.4 months of imports, respectively, at end October 2013.
Sri Lanka’s gross official reserves were maintained at a satisfactory level during the first ten months of 2013, in spite of outflows on account of foreign debt service payments of $1,251 million and IMF-SBA payments of $369 million during this period.
Exchange rate behaviour
Based on cross currency exchange rate movements, the Sri Lanka Rupee has appreciated against several major international currencies thus far during the year. During the period from end 2012 through 2 December 2013, the rupee appreciated against the Japanese yen by 15.4%, the Indian rupee by 10.6% and the Australian dollar by 10.0%.
The rupee has appreciated by 1.4% against the US dollar since end August 2013, following a brief period from mid-June to end August during which the currency depreciated. Increased inflows to the banking sector, including the receipt of proceeds from the bond issuances by NSB and DFCC in September and October 2013, respectively, has helped maintain stability in the foreign exchange market.
Meanwhile, the rupee recorded a modest depreciation of 3.0% against the US dollar during the year-to date. Reflecting the cross currency movements, the rupee also depreciated against the euro by 5.8% and the pound sterling by 4.7% during this period.
