Search found 3 matches for reserves

Sri Lanka’s import cover too low? - Mon Jul 05, 2021 3:05 pm

Nandun

CHRONICLE wrote:

Sri Lanka Gross Official Reserve Cover for months of imports stood at 3.1 months as at April 2021. Is this too low? The media has portrayed the decline in reserves and import cover as a liquidity crisis, creating a negative image that can be very harmful to business sentiment and the economy.

The months of import cover indicates the number of months of imports that can be covered by the reserves held at the central bank. However, the central bank reserves are not directly used for the finance of imports. It is merely an indicator showing the reserves relative to imports, for the ease of comparison between countries.

When we compare Sri Lanka's import cover with developed countries such as the United Kingdom, Netherlands, Germany and Australia we observe that the island has a higher import cover. These developed countries have continued to have lower import cover than Sri Lanka for the past 10 years. It is important to understand the indicator and view it in a global context prior to making a judgment of whether it is negative or not.

#lka #reserves #srilanka #importcover #economy #srilankaeconomy #centralbank #liquidity #SLEconomy

According to my knowledge import cover can't describe whole picture import cover depend on the country's strategy
https://www.ceicdata.com/en/indicator/foreign-exchange-reserves-months-of-import

Search in: EXPERT CHRONICLE™ Topic: Sri Lanka’s import cover too low? Replies: 12 Views: 2113

Sri Lanka’s import cover too low? - Mon Jul 05, 2021 10:42 am

dayandacool

CHRONICLE wrote:

Sri Lanka Gross Official Reserve Cover for months of imports stood at 3.1 months as at April 2021. Is this too low? The media has portrayed the decline in reserves and import cover as a liquidity crisis, creating a negative image that can be very harmful to business sentiment and the economy.

The months of import cover indicates the number of months of imports that can be covered by the reserves held at the central bank. However, the central bank reserves are not directly used for the finance of imports. It is merely an indicator showing the reserves relative to imports, for the ease of comparison between countries.

When we compare Sri Lanka's import cover with developed countries such as the United Kingdom, Netherlands, Germany and Australia we observe that the island has a higher import cover. These developed countries have continued to have lower import cover than Sri Lanka for the past 10 years. It is important to understand the indicator and view it in a global context prior to making a judgment of whether it is negative or not.

#lka #reserves #srilanka #importcover #economy #srilankaeconomy #centralbank #liquidity #SLEconomy

This statistic needs to be viewed with how much they spent for imports of essentials such as Medicines, Foods ect from other countries as most of the above mentioned countries do produce the aforesaid in abundance and have an excess to export as well. Correct me if I am wrong. In such a context, It is a dire need of a country like SL to maintain a steady import cover and this can't be viewed as a betterment compared to the mentioned countries.

Search in: EXPERT CHRONICLE™ Topic: Sri Lanka’s import cover too low? Replies: 12 Views: 2113

Sri Lanka’s import cover too low? - Mon Jul 05, 2021 10:09 am

CHRONICLE™

Sri Lanka Gross Official Reserve Cover for months of imports stood at 3.1 months as at April 2021. Is this too low? The media has portrayed the decline in reserves and import cover as a liquidity crisis, creating a negative image that can be very harmful to business sentiment and the economy.

The months of import cover indicates the number of months of imports that can be covered by the reserves held at the central bank. However, the central bank reserves are not directly used for the finance of imports. It is merely an indicator showing the reserves relative to imports, for the ease of comparison between countries.

When we compare Sri Lanka's import cover with developed countries such as the United Kingdom, Netherlands, Germany and Australia we observe that the island has a higher import cover. These developed countries have continued to have lower import cover than Sri Lanka for the past 10 years. It is important to understand the indicator and view it in a global context prior to making a judgment of whether it is negative or not.

#lka #reserves #srilanka #importcover #economy #srilankaeconomy #centralbank #liquidity #SLEconomy

Search in: EXPERT CHRONICLE™ Topic: Sri Lanka’s import cover too low? Replies: 12 Views: 2113