Gross official reserves estimated at USD 5.7bn at end 2020

Sri Lanka’s gross official reserves were estimated at US dollars 5.7 billion at the end of 2020, with an import cover of 4.3 months, the Central Bank said continuing its accommodative monetary policy stance.

The trade deficit is expected to have narrowed by over US dollars 2.0 billion in 2020 in comparison to the previous year.

Workers’ remittances have grown by 5.8 percent to US dollars 7.1 billion in 2020, with a historic high level of remittance receipts in December 2020.

Meanwhile, the headline inflation, based on the Colombo Consumer Price Index (CCPI), remained mostly within the targeted range of 4-6 per cent during 2020.

With the pandemic induced weak global and domestic economic conditions, inflation is expected to remain low in the near term.

“However, with the expected improvement in domestic aggregate demand conditions supported by significant policy stimuli and the anticipated improvement in external conditions, inflation could briefly accelerate over the medium term,” the Central Bank said.

“Nevertheless, the envisaged improvements to domestic supply conditions, supported largely by pro-growth policies and reforms introduced by the Government, are likely to negate demand driven price pressures in the period ahead.”