Sri Lanka reserves up on government borrowings

Dec 14, 2007 (LBO) – Sri Lanka’s official foreign reserves had shot up to 3,226 million dollars in October from following a 500 million dollar sovereign bond issue, allowing the country to record a 475 million dollar surplus for the year, the Central Bank said. In January foreign reserves were 2,526 million US dollars. Total reserves were 4,509 million dollars.

Foreign inflows to the government from loans, grants as well as sales of government debt had increased to 1,748 million dollar in 2007, compared to 815 million in 2006.

The Central Bank had earlier said that sales of rupee denominated bonds in the first two quarters of the year had brought in 460 million dollars.

On November 30, the Central Bank doubled the foreign ownership limit on foreign rupee debt holdings to 10 percent of total outstanding debt.

“This measure is expected to increase foreign inflows to the government in the future as there is significant demand for these bonds among foreign investors including individual investors, foreign country funds, mutual funds and regional funds,” the Central Bank said.

An inflow of foreign dollars after the relaxation panicked exporters last week, who dumped dollars sending the rupee zooming up. Since October the rupee had appreciate