Sri Lanka foreign reserves US$1,556mn in June

Aug 11, 2009 (LBO) – Sri Lanka’s official foreign reserves without an advance to local banks were 1,556 million US dollars in June, up from 1,291 in May, with 270 million US dollars flowing in to rupee Treasuries so far this year, the Central Bank said. In July, with the approval of a 2.6 billion US dollar IMF loan, the first tranche of 322 million dollars had also come to the Central Bank.

With a 62 million US dollar advance to local banks, gross official reserves, which include fiscal balances, were at 1,618 million US dollars, up from 1,436 million US dollars in May.

The advance to local state banks, which is essentially a domestic asset, was 145 million US dollars in May. Under an International Monetary Fund backed program the loan is expected to be fully repaid to the Central Bank by September.

From mid-May to August 10, the foreign buyers had bought about 270 million US dollars worth of treasuries.

The Central Bank had also bought 890 million US dollars from the market in the period.

Foreign reserves with a balance of Asian Clearing Union, a regional arrangement involving non-convertible currencies, were 1,737 million US dollars.

The Central Bank said foreign reserves were enough to finance 1.7 months of imports but falling imports indicated that the reserve cover was much larger on projected imports.

Foreign reserves started to rise after May when the central bank floated the rupee and stopped giving dollars for imports, allowing the economy to match inflows with outflows.