Sept 29, Colombo: Sri Lanka recorded a Balance of Payment (BoP) surplus of over US$ 1 billion by the end of July 2011 as gross official reserves increased to US$ 8.1 billion, the Central Bank said Thursday.
Although the trade deficit also expanded to US$ 5.077 billion, Balance of Payments (BOP), which includes all foreign currency inflows and outflows, recorded a surplus of US$ 1.006 billion at the end of the first seven months of 2011 as gross official reserves rose from US$ 6.61 billion by the end of 2010 to US$ 8.099 billion by the end of July 2011.
“The improved macroeconomic environment and several initiatives to attract foreign inflows contributed towards strengthening the country’s external reserve position to this level,” a release from the Economic Research Department of the Central Bank said today.
The healthy growth in the tourism sector supported the surplus in the services account to increase to US$ 461 million in the first seven months of 2011 while cumulative inflows on account of workers’ remittances amounted to US$ 2.922 billion during the same period.
Accordingly, despite the widened trade deficit, inflows to the services account and the workers’ remittances contributed to set off around two thirds of the trade deficit, the Bank reported.
During the period, the total foreign inflows to the government including the 10-year Sovereign Bond proceeds of US$ 1 billion rose to US$ 2.754 billion and foreign direct investments (FDI) in the first half of 2011 amounted to US$ 413 million.
The inflows have enabled the overall BOP to record a comfortable surplus of US$ 1.006 billion by the end of July 2011.
The relaxation measures in exchange control introduced by the Bank in November 2010 have helped to facilitate foreign exchange transactions and business activities during the past few months.
The measure which enables corporates to borrow from foreign sources resulted in in 14 private companies obtaining foreign loans amounting to US$ 197.1 million by mid-September 2011. In addition, permission granted for foreign companies to open places of business resulted in 20 new foreign companies commencing business in Sri Lanka this year, the Bank said.