Thursday, August 11, 2022
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Sri Lanka records highest BOP deficit of US$ 3,961 million

Sri Lanka has recorded a balance of payments deficit of 3,961 million US dollars, the highest in the central bank’s history, data showed, as record money printing boosted domestic consumption and investment and reserves were lost for debt and imports.

By the end of 2021 Sri Lanka has seen three years of balance of payments deficits without a correction in monetary policy.

After three years of money printing, inflation has surged to 14.2 percent by January 2022.

Sri Lanka’s gross foreign reserves dropped 24 percent to 2,361 million US dollars in January 2022 from 3,137 million US dollars in December 2021 data showed, amid debt repayments and possible interventions.

The country received a 400 million US dollar swap from India in January and repaid a 500 million US dollar sovereign bond. It’s expecting another US$ 1 billion from India to tide over the storm.

Tourism earnings have increased but foreign remittances continue its downward trend forcing the government to borrow more dollars from foreign donors and if it runs out of potential lenders, it surely runs into problems.several eminent economists warned.

Earnings from tourism have increased to $ 268.3 million in December 2021 compared 4 5.5 million in the same month in 2020 while foreign remittance fell to $325.2 million in December 2021 from $812.7 in the same month in 2020, Central Bank data showed.

The reserve money decreased compared to the previous week mainly due to the decrease in deposits held by the commercial banks with the Central Bank.

The total outstanding market liquidity was a deficit of Rs. 693.539 bn by end of this week, compared to a deficit of Rs. 617.991 bn by the end of last week Broad money (M2b ) expanded by 13.2 per cent, on a Y-o-Y basis, in December 2021.

Net Credit to the Government from the banking system increased by Rs. 212.5 billion in December 2021. Outstanding credit to public corporations increased by Rs. 3.4 bn in December 2021.

Outstanding credit extended to the private sector increased by Rs. 61.3 bn in December 2021 During the period from January to November 2021, government revenue increased to Rs. 1,322.0 bn compared to Rs. 1,259.1 bn recorded in the corresponding period of 2020, Central BANK’

During the period from January to November 2021, total expenditure increased to Rs.3,033.4 bn compared to Rs. 2,838.5 bn recorded in the corresponding period of 2020.

During the period from January to November 2021, overall budget deficit increased to Rs. 1,709.3 bn compared to Rs. 1,576.4 bn recorded in the corresponding period of the previous year.

During the period from January to November 2021, domestic financing decreased to Rs. 1,812.3 bn compared to Rs. 1,822.8 bn in the corresponding period of 2020.

Foreign financing recorded a net repayment of Rs. 103.1 bn during the period from January to November 2021 compared to a net repayment of Rs. 246.2 bn recorded in the corresponding period of 2020.

During the year up to 18th February 2022, the Sri Lankan rupee depreciated against the US dollar by 0.8 per cent.

Outstanding central government debt increased to Rs. 17,413.7 bn by end November 2021 from Rs. 15,117.2 bn as at end 2020.

Since end 2020, total outstanding domestic debt increased by 20.4 per cent to Rs. 10,914.9 bn, and the rupee value of total outstanding foreign debt increased by 7.4 per cent to Rs. 6,498.8 bn by end November 2021.

Sri Lanka’s gross foreign reserves dropped 24 percent to 2,361 million US dollars in January 2022 from 3,137 million US dollars in December 2021 data showed, amid debt repayments and possible interventions.

Sri Lanka got a 400 million US dollar swap from India in January and repaid a 500 million US dollar sovereign bond.

Sri Lanka also had to pay some dollar denominated local law bonds after most of them failed to be rolled over.

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