Balance of Payments surplus tops $ 2 b

Thursday, 18 September 2014 00:10 -     - {{hitsCtrl.values.hits}}

  • Gross official reserves at $ 9.2 b by end August
The Central Bank said yesterday that the Balance of Payments (BOP) surplus in the first seven months is estimated to be $ 2.015 billion as against a deficit of $ 180 million a year earlier. The estimate was disclosed in the release of July external trade data yesterday. “The improved BOP position strengthened the international reserves and stabilized the exchange rate further,” the Central Bank added. It said as at end July 2014, Sri Lanka’s gross official reserves amounted to $ 9 billion, while the same is estimated to have increased to $ 9.2 billion by end August. Total foreign assets, which include foreign assets of the banking sector, amounted to $ 10.5 billion at end July 2014. Gross official reserves were equivalent to 5.9 months of imports, while total foreign assets were equivalent to 6.9 months of imports. A healthy level of reserves was maintained amidst foreign exchange outflows on account of debt service payments amounting to $ 1,478 million and repayment of the IMF-SBA of $ 433 million during the first seven months of the year. The Central Bank said long term loan inflows to the Government amounted to $ 1,100.3 million during the first seven months of the year compared to $ 1,050.5 million during the same period of 2013. Net inflows to the Government securities market stood at $ 231.8 million by end July 2014, which included Treasury bills and Treasury bonds amounting to $ 81.7 million and $ 150.1 million, respectively. Foreign investments in the Colombo Stock Exchange (CSE) up to end July 2014 recorded a net inflow of $ 84.3 million. Foreign Direct Investments, including loans to BOI companies, amounted to $ 850 million during the first half of 2014 recording a growth of 54.8% from $ 549.1 million in the first half of 2013. Meanwhile, inflows to licensed commercial banks and licensed specialised banks amounted to $ 125 million during the first seven months of 2014. Commenting on the exchange rate behaviour, the Central Bank said the rupee remained stable against the US dollar during the period up to 15 September, with a marginal appreciation of 0.36%. Based on cross currency exchange rate movements, the Sri Lankan rupee appreciated against the euro by 6.85%, the Canadian dollar by 4.54%, the Chinese renminbi by 1.65%, the Japanese yen by 2.57%and the pound sterling by 1.87%. Meanwhile, the Sri Lankan rupee depreciated against the Indian rupee by 1.69%and the Australian dollar by 0.60%.

 Exports maintains growth momentum in July

  • Apparel leads in Industrial exports growth of 12%; agriculture exports up 8%
  • First seven months total exports up 16% to $ 6.4 b
Sri Lanka’s exports remained on the up in July thanks to positive contribution from all categories and more significantly from the industrial sector. The Central Bank said yesterday earnings from exports grew by 11.1% to $955 million in July 2014, recording a cumulative growth of 15.9% to $ 6.4 billion during the first seven months of 2014. “All major export categories contributed to the growth in exports, while the largest contribution came from industrial exports,” the Central Bank said. Reflecting the impact of seasonal demand, textile and garment exports grew at a higher rate (by 11% to $ 414.5 million) while the exports of rubber products also increased by 17%, helped by an enhanced level of exports of rubber tyres. However, export earnings from bunkering and aviation fuel which account for a major share in petroleum products declined due to lower volume although an increase in prices was recorded. “This partly reflects the heightened competition in the industry from major regional players such as India and Singapore,” the Central Bank said. Exports earnings from gems and diamonds dipped while jewellery exports increased in July 2014. However, the overall sector saw a decline of 31% in July. Earnings from agricultural exports rose by 7.8% mainly due to enhanced performance in coconut and tea exports. The growth in kernel product exports drove the increase in earnings on coconut exports. Meanwhile, earnings from tea exports recorded a healthy growth of 8.5% supported by favourable prices despite declined volumes. Export earnings from seafood and minor agricultural products also contributed significantly to the growth in agricultural exports. However, in July 2014, earnings from rubber exports declined mainly due to adverse weather conditions and continuous drop in rubber prices in the international market, while earnings from export of spices declined mainly due to lower production.

 Oil spikes July imports, trade deficit

A sharp rise in oil purchases in July as opposed to a year ago saw a spike in imports for the first time in three months apart from widening the trade deficit by 55%. Import expenditure on fuel increased by 93.3%, year-on-year, to $516 million in July 2014 mainly due to the base effect of non-importation of crude oil in July 2013 and 6.5% increase in imports of refined petroleum products. Expenditure on overall imports increased by 29% to $1,845 million in July 2014 reflecting an increase in all major import categories, but were particularly in fuel, the Central Bank said. “Expenditure on imports also recorded an increase in July 2014 compared to the decline recorded in the preceding three months,” it added. Spike in July imports dwarfing exports growth saw trade deficit widened by 55% to $891 million, compared to $574 million in July 2013. However, on a cumulative basis, trade deficit in first seven months of 2014 is lower by 11.5% $ 3.96 billion compared to the corresponding period in 2013. On a cumulative basis, expenditure on imports increased by 2.9% to $ 10.8 billion during the first seven months of 2014. Import expenditure on base metals increased by 137.9%, year-on-year to $56 million mainly due to an increase in iron, steel and copper imports. Import expenditure on consumer goods increased due to an increase in both food and non-food consumer good categories. A substantial increase in imports of sugar and confectionery, cereals and milling industry and dairy products led the increase in import expenditure on food and beverages, while non-food consumer goods imports increased mainly due to the significant increase in clothing and accessories and vehicle imports. Expenditure on imports of investment goods grew in July 2014 supported by imports of machinery and equipment and building materials.