Sri Lanka’s short-term outflows exceed usable reserves | Daily News

Sri Lanka’s short-term outflows exceed usable reserves

Sri Lanka’s gross official reserves have been consistently declining since June 2019 and as of January 2022, usable foreign exchange reserves stand at USD 792 million, while the twelve-month outflows at end of 2021 stand at USD 6,904 million, which is approximately 9 times the January 2022 reserve balance. These 12-month (short-term) outflows refer to predetermined net drains on foreign currency assets and include foreign currency liabilities of both the government and the Central Bank of Sri Lanka, a Finance Ministry web said.

Sri Lanka owes approximately 40% of its total central government debt to foreign creditors in the form of bilateral debt, multilateral debt and financial markets. On the domestic revenue front, the National Water Supply and Drainage Board (NWSDB) experienced losses in the years 2018 and 2019, primarily due to the drop in the Gross Profit margin and the increase in administrative cost – particularly staff cost and capital depreciation. However, in the year 2020, the NWSDB returned to profitability with improved revenue performance.

The gradual decline in the non-revenue water supply is an indication of the improved revenue efficiency of the NWSDB

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