Reserves close to US $ 6 billion

More space for economic activities:

Charumini DE SILVA

Sri Lanka’s total foreign reserves are close to exceed the US $ 6 billion, Central Bank Governor Ajith Nivard Cabraal told Daily News Business.

Governor Nivard Cabraal

This is mainly due to factors such as favourable response from the foreign investors, increased remittances, increased export proceeds and tranches of the International Monetary Board (IMF) Stand-By-Agreement.

The foreign reserves of the country have recorded a 15 percent growth compared to the end of 2009, which was US $ 5.2 billion.

“There is a tremendous growth in foreign reserves during the first half of this year compared to the corresponding period of 2009. The lowest foreign reserves of US $ 1.2 billion were recorded in March last year,” he said.

Having a large amount of foreign reserves assures and provides confidence to the public that the banking regulator has the ability of repaying the loans, imports and on due time as well, Cabraal said.

The majority of the foreign remittances were from Sri Lankan migrant workers in the Middle-East, which accounts for 60 percent while 20 percent are from the European countries.

The remaining remittances were recorded from North America, Australia and Far East Asian countries.

The Central Bank expects foreign remittances will further expand by the end of this year.

He said the position of the foreign reserves is very strong.

“Putting all these aspects together we think that the monetary policy that has been put in place is a bit relaxed and the interest rates have been brought down. This will support investors and business with more space for economic activities.

The Governor said they are confident that the positive trends and factors will soon set the environment of the country’s foreign reserves to exceed the US$ six billion.

“This will ensure Sri Lanka the impetus and the momentum for the economy to grow and stabilize well,” the Governor said.