Sri Lanka BOP surplus US$1.4bn in 2014, forex reserves US$8.2bn: CB Governor

EconomyNext – Sri Lanka has recorded a ‘balance of payments’ surplus of 1.4 billion US dollars in 2014 ending the year with foreign reserves of 8.2 billion US dollars, Central Bank Governor Nivard Cabraal said.

In 2013 Sri Lanka had recorded a BOP surplus of a billion US dollars, he said.

Foreign reserves had fallen in the last quarter the year after peaking at 9.0 billion US dollars during the year.

A country is able to record a so-called ‘BOP surplus’ and build up foreign reserves when domestic credit is slow and excess liquidity builds up in the banking system from inflows, which can be sterilized and foreign reserves retained.

But when credit picks up, it is less easy to collect reserves, especially when interest rates are low.

Last year the trade deficit narrowed as import growth also slowed with weak credit.

In 2014 remittances were rose to about 7.0 billion dollars, ICT revenues 823 million dollars, other services 481 million dollars and tourism 2,324 million dollars, he said.

The island’s exports grew 10 percent to 11.5 billion US dollars in 2014 while imports were 19 billion dollars resulting in a trade deficit of 8.0 billion dollars, up 4.7 percent from 2013.

Foreign direct investment will be probably close to 2.0 billion US dollars, he said.

Inflows to the Colombo Stock Exchange were 165 million dollars, government project loans 1,530 million, sovereign bonds 1,500 million, foreign borrowings by banks 975 million and foreign borrowing by the corporate sector 859 million dollars.

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