Worker remittances, FDI slow down

In other inflows to the country, the two major segments of worker remittances and foreign direct investments (FDIS) performed poorly in November, although the overall balance of payments for the year up to November 2016 improved substantially.

Workers’ remittances, the country’s main foreign exchange earner, fell 1.2 percent YOY to US$ 567.4 million. Oil prices had fallen in late October 2016 ahead of the OPEC oil production cut in November, and remittances may have been affected, due to most of it coming from the Middle East.

Earnings from tourism however, increased 20.1 percent YOY to US$ 286.9 million. Net inflows to the Colombo Stock Exchange were recorded at US$ 2 million, up from a US$ 0.4 million net deficit YOY.

Government foreign borrowings fell to US$ 227.6 million from US$ 1.61 billion YOY, as a US$ 1.5 billion sovereign bond issuance had taken place in November 2015. Long term loans increased 466.8 percent YOY to US$ 219.5 million.

There were no FDIS in November, similar to the situation a year ago, as policy inconsistency and infighting among the parties in the unity government discouraged investors.

For the first 11 months of 2016, workers’ remittances increased 3.1 percent YOY to US$ 6.56 billion, while tourism earnings increased 18.7 percent YOY to US$ 3.13 billion. There was a net outflow of US$ 8.7 million from the Colombo bourse, down from a US$ 7.5 million net inflow YOY.

Government inflows for the 11 months increased 0.6 percent YOY to US$ 1.21 billion, although FDIS, including loans to some companies, fell 34.4 percent YOY to US$ 444.5 million

The overall balance of payments for the period is estimated to have improved to a US$ 635.3 million deficit from a US$ 1.27 billion deficit YOY.