Country’s reserves in a comfortable position – Treasury Secretary | Sunday Observer

Country’s reserves in a comfortable position – Treasury Secretary

24 January, 2021

The country’s gross official reserves are in a satisfactory position and the government is comfortable with the current amount of reserves, said Treasury Secretary S.R. Attygalle responding to the need to seek funding from a multilateral donor to boost reserves.

“We are quite comfortable with the level of reserves which will grow this year with exports picking up and foreign direct investments starting to come in,” Attygalle said, adding that the country has foreign reserves to support four months of imports.

Gross official reserves are estimated at US dollars 5.7 billion at end 2020, with an import cover of 4.3 months according to data from the Central Bank. “Last year we settled loans fully and this year too we have no issue in setting the debt. Merchandise exports recorded around USD 10 billion last year despite the pandemic while imports dropped drastically to below USD 15 billion from around USD 21 billion narrowing the trade deficit.

“The Export Development Board, the apex body driving exports, targets an export income of US$ 10.15 billion in merchandise exports and US$ 4.58 billion in services exports this year,” the Treasury Secretary said, adding that the import cover for four months was a scenario even during the former government and that is a comfortable position. “There is no need at all to seek funding from anyone as the opposition claims. The Central Bank has certain arrangements to boost reserves,” Attygalle said.

Amidst hostile global market conditions, the Government and the Central Bank continued to explore avenues of financial flows to the country, while discussions with domestic and foreign counterparts in this regard have made notable progress.

The trade deficit is expected to have narrowed by over US dollars 2.0 billion last year compared to the previous year.