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External Sector Performance - March 2018

The external sector displayed a mixed performance in March 2018.  Even though expenditure on imports continued to increase, exports which peaked to historic high levels in March 2018, contributed to a lower trade deficit vis-a-vis the previous two months of the year. Earnings from tourism increased notably in March 2018 continuing the positive trend observed since January 2018. Workers’ remittances rose during the month reversing the decline recorded in February 2018. Meanwhile, the financial account of the Balance of Payments (BOP) experienced some outflows in March, particularly with the withdrawal of foreign investments from the government securities market and the Colombo Stock Exchange (CSE).  The level of gross official reserves of the country remained at a healthy level.

Deshamanya Amarananda Somasiri Jayawardena, Former Governor of the Central Bank, Passes Away

The Central Bank, with deep sorrow, wishes to announce the demise of Deshamanya Amarananda Somasiri Jayawardena, former Governor of the Central Bank of Sri Lanka. He passed away at the age of 82, on the 29th of May, 2018.

Deshamanya A S Jayawardena was the tenth Governor, functioning in this position from November 1995 to June 2004. He joined the Central Bank in 1958 and served in the Secretariat, Establishments and Economic Research Departments before being appointed as Director of Economic Research (1977 – 1980).

He served as Assistant to the Governor and Executive Director during 1980-1981 and also functioned as the Alternate Executive Director of the IMF from 1981 -1986. He served as Deputy Governor from 1986 – 1989 and was the Senior Deputy Governor from 1993 - 1994.

External Debt and Reserves - Need to identify not only borrowings but also the debt repayments in analyzing how gross official reserves were utilized

A misleading news item has been disseminated in relation to Sri Lanka’s foreign reserves and external debt servicing.

The contents of the news item portray a misleading picture of the country’s external position. While stating that around USD 8.9 billion of borrowings by the government were absorbed to Central Bank reserves during 2015-2018, the article provides no consideration on the significant debt repayment effected by utilization of reserves during the period, which the Central Bank is obligated to as the official debt manager of the government.  

Since 2015, the government has serviced external debt of around US$ 7.5 bn as capital and interest payments utilizing external reserves.  Simply put, gross official reserves as at end 2014 amounted to US$ 8.2 bn. If there were no further borrowings or non-borrowed increase of reserves, the external debt servicing of around US$ 7.5 bn would have resulted in gross official reserves depleting to US$ 0.7 bn by now.