Apr 03, 2013 (LBO) – Sri Lanka’s foreign reserves had edged marginally lower by 22 million US dollar in January 2013 to 6,855 million US dollars from a month earlier, official data showed. The Central Bank said reserves were equal to 4.4 months of imports. Sri Lanka’s imports fell 21.3 percent in January 2013 from a year earlier as credit growth slowed and there was no liquidity injections compared to a year earlier.
Sri Lanka’s foreign reserves are more than enough to meet the central banks rupee note liabilities to citizens (reserve money) of 512 billion rupees at an exchange rate of 126 rupees as long as forex sales are not sterilized with fresh liquidity injections.
The central bank said there was a10.4 million US dollars of net selling by foreign investors in the Colombo stock exchange but 289 million dollars had flowed into government securities.
In January the government had also received 125 million US dollars of long-term loans.
When the government spends the money they can generate more imports.