Sri Lanka’s Gross Official Reserves Surge to $5 Billion

Sri Lanka’s Gross Official Reserves (GOR) soared to US$5 billion by the end of March 2024, marking a notable increase from US$4.4 billion recorded at the close of 2023. This substantial boost includes a swap facility valued at around US$1.5 billion from the People’s Bank of China (PBOC), subject to specific conditions on usability.

According to the latest announcement from the Central Bank, the surge in GOR was primarily propelled by substantial net purchases of foreign exchange from the domestic foreign exchange market. Notably, net intervention in March 2024 amounted to US$715 million, based on trade date assessments, with first-quarter net purchases totaling US$1.2 billion.

Importantly, the import coverage of GOR, inclusive of the PBOC swap, has consistently maintained a healthy position, remaining above 3 months of imports since December 2023.

This positive trajectory in foreign reserves management underscores a stark contrast from the dire situation observed in November 2022 when reserves plummeted to a precarious US$1.58 billion. Highlighting the progress made, it’s worth noting that when the Rajapaksa government assumed office in November 2019, the country’s foreign reserves stood at approximately US$7.5 billion.

The Central Bank’s latest report signals a promising outlook for the country’s economic stability and resilience in the face of global uncertainties, bolstered by effective foreign reserves management strategies. (LankaXpress.com)