Sri Lanka may see RM3.6b balance of payments surplus in 2012
COLOMBO, April 9 — Sri Lanka could swing to a surplus of $1.2 billion (RM3.6 billion) in its balance of payments this year on a jump in exports and a doubling in foreign investment, said the central bank, which has raised policy rates and adopted a flexible exchange rate to avert a balance-of-payments crisis.
That would mark a big reversal from last year's deficit of $1 billion, created in part after the central bank spent more than $2.7 billion in the second half to stave off depreciation pressure on the rupee.
“Sri Lanka could see a balance-of-payments surplus of $1.2 billion this year if the measures we have taken work,” Central Bank Governor Ajith Nivard Cabraal said at a gathering to mark the release of the bank's annual report for 2011.
“Our foreign currency reserves are also on a rising trend and are now over $6.1 billion and that is a comfortable level.”
Since Feb 9 the central bank has refrained from defending the rupee at a specific price level and also has raised key policy rates twice to two-year highs to reduce heavy importer dollar demand.
Those measures and government action to hike fuel, transport, electricity prices as well as motor vehicle taxes have helped stabilise the economy and led to the International Monetary Fund last week approving a delayed tranche of Sri Lanka's $2.6 billion loan.
Cabraal said Sri Lanka will likely see 7.2 per cent economic growth this year compared to a record 8.3 per cent expansion in 2011.
In 2012, exports are forecast to jump 19 per cent to $12.5 billion, foreign direct investment is expected to double to $2 billion and remittances from workers abroad will likely climb by a quarter to $6.5 billion.
Cabraal also said the island nation's government debt-to-GDP declined to a 27-year low of 78.5 per cent in 2011 from the previous year's 81.9 per cent. — Reuters