Sri Lanka’s Short-Term Outflows Exceed Usable Reserves

Abstract

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 Mn, while the twelve-month outflows at end of 2021 stand at USD 6,904 Mn, which is approximately 9 times the January 2022 reserve balance. These twelve-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.