CB confirms external sector was stable in 2014

Thursday, 26 February 2015 01:25 -     - {{hitsCtrl.values.hits}}

  The Central Bank yesterday confirmed that the country’s external sector remained stable during 2014 with continuous inflows being recorded in the Balance of Payments (BOP). “Foreign exchange inflows to the country in terms of exports, tourist earnings, workers’ remittances, foreign direct investments (FDI) and other inflows to the financial account recorded a noteworthy growth during the year,” the Central Bank said. Although the increase in imports towards the end of the year exerted some pressure on the current account, the overall balance of the BOP recorded a surplus of $ 1.4 billion during 2014. On a cumulative basis, earnings from exports during 2014 grew by 7.0% to $ 11,118 million, while expenditure on imports amounted to $ 19,417 million registering 7.9% growth. CB... The leading markets for merchandise exports of Sri Lanka during 2014 continued to be the USA, UK, India, Italy and Germany accounting for about 50% of total exports, while the main import origins continued to be India, China, UAE, Singapore and Japan accounting for about 59% of total imports. Trade deficit during 2014 widened by 9.1% to $ 8,299 million over 2013. The expansion was fuelled by an addition of $ 788 million in December, up from $ 563 million a year earlier. Central Bank said for the year 2014, the BOP is estimated to have recorded a surplus of $ 1,375.7 million compared to the surplus of $ 985.4 million in 2013. The country’s gross official reserves remained around $ 8.2 billion as of end December 2014. Total foreign assets, which include foreign assets of the banking sector, amounted to $ 9.9 billion. “In terms of seven months of imports, gross official reserves were equivalent to 5.1 months of imports as at end December 2014, while total foreign assets were equivalent to 6.1 months of imports,” the Central Bank said. Total foreign loan inflows to the Government amounted to $ 1,438.7 million for 2014 compared to $1,677.2 million in 2013, resulting in a decrease of 14.2%. Net foreign inflows in the secondary market transactions in the Colombo Stock Exchange (CSE) were recorded at $ 12.4 million in December 2014. With the backdrop of foreign investment outflows from emerging markets in the latter part of 2014, total net inflows to the CSE (excluding primary market inflows in December) amounted to $ 162.6 million during 2014 compared to a net inflow of $ 269.9 million in 2013. The Government securities market, which recorded a net inflow position on cumulative basis during the first nine months in 2014, recorded a net outflow of $ 113.1 million during the year, amidst some outflows of foreign investments towards the latter part of the year. However, with increasing inflows into the Government securities market during 2015 so far, the net outflow position has declined to $ 4.9 million by 13 February 2015. Meanwhile, inflows to Licensed Commercial Banks (LCBs) and Licensed Specialised Banks (LSBs) during 2014 amounted to $ 450 million. The Central Bank also said the Sri Lankan rupee remained stable against the US dollar with a marginal depreciation of 0.2% by the end 2014. Based on cross currency exchange rate movements, the Sri Lanka rupee appreciated against the Japanese yen by 13.5%, the euro by 13.2%, the Canadian dollar by 8.5%, the Australian dollar by 8.4%, the pound sterling by 5.7% and the Indian rupee by 2.1% by the end of 2014. So far during 2015, the rupee has depreciated by 1.39% against the US dollar mainly due to increasing imports. Balance of Payments surplus at $ 1.4 b up from $ 985 m in 2013 Exports up 7% to $ 11.1 b; imports by 8% to $ 19.4 b Trade deficit widens by 9% to $ 8.3 b Official reserves at $ 8.2 b as of end December 2014 Total foreign assets at $ 9.9 b