6 February 2024 12:45 am
Sri Lanka closed 2023 with its first balance of payment (BOP) surplus in four years and the highest since 2017, as the country recorded a positive balance in the external account of US $ 2,826 million last year.
This is in comparison to the deficit of US $ 2,806 million recorded in 2022, when the country fell into its worst economic crisis caused by the shortage of foreign currency.
The last time the country recorded a positive BOP was back in 2019, which came in at US $ 377 million.
This was also the highest surplus since 2017, when the balance was a positive US $ 2,068 million.
The BOP is the overall financial outcome of a country of its trade, investments and borrowings with the rest of the world.
The 2023 turnaround was largely possible from some robust recovery in the foreign currency inflows to the current account of the BOP, from particularly the remittances and tourism and of course, the debt standstill on the select foreign currency debt, which otherwise would have caused outflows up to US $ 6.0 billion a year.
Meanwhile, Sri Lanka also received a sizable amount of foreign currency from its multilateral partners, which opened up other financial flows from the World Bank and Asian Development Bank.
In December itself, the country received up to US $ 800 million from the three institutions, with the unlocking of the second programme tranche by the IMF Executive Board.
Although there are some concerns as of late with regards to the possible hiccups and likely delays in the second programme review by the IMF towards June this year, due to the alleged lack of corporation with the private creditors over debt restructuring, Sri Lanka could continue to make progress in the inflows in other areas, as the economy is slowly getting back on its feet.
Sri Lanka last week took the receipt of US $ 150 million from the World Bank, which strengthens the Sri Lanka Deposit Insurance Scheme and thereby, solidifies Sri Lanka’s financial sector safety net.