Wednesday, 25 September 2013 00:50
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Workers’ remittances up 17% to % 556 m
Earnings from tourism up 35% to $ 110 m
The Central Bank said yesterday with continued foreign currency inflows in the form of workers’ remittances, earnings from exports and tourism as well as inflows to the financial account, Sri Lanka’s external sector remained stable during the first seven months of 2013.
The external sector is expected to strengthen further with continued inflows to commercial banks and the private sector as well as through projected inflows in the form of tourist earnings and workers’ remittances during the remaining months of 2013. Exports also showed a positive growth in July for the second consecutive month in 2013, leading to narrowing the trade deficit.
Tourist arrivals grew at a rate of 26.1%, year-on-year to 100,224 in August 2013. Accordingly, the total number of tourist arrivals during the first eight months of the year increased by 14.3%, to 711,446 over the corresponding period in 2012.
Total earnings from tourism increased by 34.7% to $110 million, year-on-year, in August 2013. Cumulative earnings from tourism during the eight months of 2013 recorded a growth of 22.1%, to $784 million, from $642 million during the corresponding period in 2012.
In July 2013, workers’ remittances increased by 17.0%, to $555.9 million from $475.0 million in July 2012. Accordingly, cumulative inflows of workers’ remittances during the first seven months of 2013 amounted to $3,763.5 million, a rise of 10.1% from the first seven months of 2012.
The financial account of the BOP continued to attract investment inflows at a moderate pace. The Colombo Stock Exchange (CSE) recorded a net inflow of $8.6 million in July 2013, compared to a net inflow of $18.6 million in July 2012.
On a cumulative basis, the CSE received net inflows of $128.8 million during the first seven months of 2013. As of 23 September 2013, net cumulative foreign inflows to CSE amounted to $150 million.
The net inflows to the Government securities market amounted to $45.9 million in July 2013, compared to a net outflow of $27.4 million in June 2013. As of 20 September 2013, cumulative net foreign inflows to government securities market amounted to $493 million while the outstanding foreign holdings of Treasury bills and bonds amounted to $3.6 billion, thereby moderately exceeding the threshold earmarked for non-resident investors.
Meanwhile, long-term loans obtained by the Government amounted to $1,054.5 million during the first seven months of 2013, lower than the loans of $2,193.4 million obtained during the first seven months of 2012, which included proceeds of the international sovereign bond of $1 billion.
FDI inflows, including foreign loans to BOI companies, amounted to $540 million during the first half of 2013, an increase of 20%, compared to $451 million during the first half of 2012. Furthermore, inflows to commercial banks during the first half of the year amounted to $664 million.
Sri Lanka’s gross official reserves stood at $6.3 billion at end July 2013 while total international reserves, which include foreign assets of commercial banks, amounted to $7.3 billion. Despite the outflows on account of IMF-Stand-by Arrangement (SBA) repayments, foreign debt service payments, as well as the impact of valuation changes, Sri Lanka’s gross official reserves have been at a satisfactory level during the first seven months of 2013 with gross official reserves and total reserves of the country being equivalent to 4.0 months and 4.7 months of imports, respectively.
Meanwhile, the National Savings Bank (NSB) raised $750 million by issuance of an international bond in foreign capital markets in September 2013 with a high market participation, reflecting increased and continued investor confidence in the Sri Lankan economy. With the receipt of $750 million, the financial account of the BOP strengthened further, and the gross official reserve position is estimated to have surpassed US$ 7 billion by 23 September 2013.
As a result of cross currency exchange rate movements, the Sri Lankan Rupee has strengthened against several major international currencies so far during the year. Accordingly, by 23 September 2013, the rupee has appreciated against the Japanese yen by 11.1%, the Indian rupee by 8.7% and the Australian dollar by 5.8%. However, the Sri Lankan Rupee depreciated against the US Dollar by 3.8%, the Pound Sterling by 3.2%, the Euro by 6.1% and the Chinese Yuan by 5.5% by 23 September 2013.
