Substantial portion of the daily outflows from the Treasury bill and bond market occurred during the first week of February which gradually subsided in the latter part of the month. Further, long term loans to the government recorded a net inflow of US dollars 108 million during February 2018.
Tourist arrivals in this year’s first two months saw an increase of 13.8 per cent compared to the corresponding period of 2017. Earnings from tourism are estimated at US dollars 437 million in February 2018, with the cumulative earnings amounting to US dollars 880 million for the first two months of 2018.
Meanwhile, workers’ remittances moderated in February 2018, as has been the usual pattern over the last several years. On a cumulative basis, workers’ remittances increased by 2.6 per cent compared to the first two months of 2017.
In February 2018, expenditure on imports recorded the highest year-on-year growth rate since October 2014. In nominal terms, import expenditure in February 2018 amounted to US dollars 1,978 million. This substantial increase in import expenditure was partly attributable to the relatively lower base recorded in February 2017.
Gross official reserves of the country increased to US dollars 7.9 billion at end February 2018, equivalent to 4.4 months of imports. The monthly reserve increase was primarily due to accumulation of Asian Clearing Union (ACU) liabilities managed by the Central Bank. Total foreign assets, including foreign assets of the banking sector, also increased to US dollars 10.1 billion as at end February 2018, compared to US dollars 10 billion at end January 2018. At the end of February 2018, total foreign assets were sufficient to cover 5.6 months of imports.
A notable growth in tourist arrivals and continuous net foreign inflows to the stock exchange amid a significant widening of the trade deficit characterized the external sector performance in February 2018. A surge in gold imports was the primary driver behind the fastest increase in overall merchandise imports in nearly 3-1/2-years, resulting in a further widening of the trade deficit in February 2018