Foreign inflows boom

Monday, 31 December 2012 00:35 - - {{hitsCtrl.values.hits}}

Foreign inflows to the country are on the rise as per Central Bank data released on Friday.

It said that with respect to the services account and current transfers in the BOP, earnings from tourism and workers’ remittances continued to grow at a healthy rate.

Tourist arrivals in November 2012 increased by 20.1% to 109,202, with arrivals during the first eleven months of 2012 totalling 883,353 reflecting a growth of 16.5%. Earnings from tourism in November 2012 grew at a healthy rate of 30.1% compared to the corresponding month of 2011, to $ 114.7 million.

Earnings from tourism during the first 11 months of 2012 increased by 23% year-on-year to $ 905.3 million. With the record high earnings from tourism in November 2012, and similar expectations for December 2012, earnings from tourism in 2012 are expected to be well above the level recorded for 2011, with tourist arrivals expected to be in the proximity of one million.

Inflows on account of workers’ remittances increased at a rate of more than 12.7%, year-on-year, in November 2012. For the first eleven months of 2012, workers’ remittances recorded a growth of 17.1%, year-on-year, and amounted to $ 5,432 million.

“Higher inflows in terms of tourism earnings and workers’ remittances are expected to increase foreign exchange liquidity in the market, thereby strengthening the external value of the rupee,” the Central Bank said.

It also said substantial foreign currency inflows have been recorded in the capital and financial account of the BOP during the first eleven months of 2012.

Foreign investments at the Colombo Stock Exchange (CSE) increased to $280 million, on a net basis, by end November 2012, while there have been a significant increase in foreign investments in Government securities, with net inflows to Treasury bills and Treasury bonds during the first 11 months of 2012 amounting to $ 833 million.

Meanwhile, long-term loans obtained by the government during the first 10 months of 2012 amounted to $ 2,614 million. In addition, long-term borrowings by commercial banks during January-November 2012 amounted to $ 973 million.

Foreign Direct Investment (FDI), including foreign loans obtained by BOI companies, amounted to $ 615 million for the first nine months of 2012, and more inflows are expected to have materialised during the remainder of the year.

Gross official reserves amounted to $ 6,490 million by end November 2012, while total international reserves, which include gross official reserves and foreign assets of commercial banks, amounted to $ 8,059 million. In terms of months of imports, gross official reserves were equivalent to 4.1 months of imports by end November 2012, while total reserves were equivalent to five months of imports.