Foreign debt to GDP ratio slashed to 40%. The non-debt inflows are expected to rise with the new investment arm of Colombo Port City Economic Commission and the purchase of export proceeds and worker remittances from the market by the Central Bank with other inflows to the Government from multilateral and bilateral sources which includes, SWAP facilities: USD 250 million from the Bangladesh Bank; USD 400 million from the SAARC Finance SWAP facility from the Reserve Bank of India in August and USD 1,000 million initiated with the Indian counterpart.
Moreover, around USD 800 million under the IMF SDR allocation is expected in August 2021. The country’s reserves position was USD 4.5 billion excluding the standby SWAP agreement of USD 1.5 billion with the People’s Bank of China.
The external sector remained resilient amidst the challenges posed by the pandemic. The earnings from exports increased by 29.6% to USD 3,800 million in the first four months of 2021 benefiting from the rise in earnings from textile and garments, rubber products, agricultural exports such as tea, spices and coconut and mineral products.
Also, expenditure on imports increased by 20% to USD 6,748 million due to the increased import bills of food and beverages, medical and pharmaceuticals, fuel, textiles, chemical and plastic products, machinery and equipment and building materials. The trade deficit widened to USD 2,948 million.
The workers’ remittances elevated significantly by 20.8% to USD 2,386 million.
The private sector credit increased by 8.2% to Rs. 6,445.9 billion in end April reflecting the promotion of credit to the priority sectors such as micro, small and medium scale enterprises (MSMEs) of the economy. Credit to the public sector also increased by 17.1% to Rs. 1,093.4 billion in the first four months.
Colombo Stock Exchange activities showed a significant rebound in the first quarter of 2021 as its operations continued unhindered compared to the same period of 2020.
Looking ahead the reports adds that the world economic conditions reiterate the need for promoting inclusive, sustainable and resilient economic growth equipped with macroeconomic stability, debt sustainability, human resources development, targeted and well-oriented social protection and climate resilience.
As the rest of the World, Sri Lanka is faced with similar daunting challenges posed by the pandemic and ensuing global economic factors, but the country is positioned to achieve strong economic recovery with the revival of economic activities, better revenue administration, focused public investments and policy certainty.
The purpose of the report is to provide updated information on the Government’s fiscal performance and is at https://publicfinance.lk/en/report/midyearfiscposreport-2021-mof