The trade deficit for the period January to November 2011 more than doubled, expanding 111.3 percent to US$ 8.8 billion from US$ 4.18 billion a year earlier, as export growth was outpaced by the growth of imports. Official reserves which stood at US$ 6.2 billion as at end November 2011, fell 30.6 percent, down from US$ 8.1 billion as at end July 2011, data released by the Central Bank yesterday (Jan. 25) showed.
Export earnings during this eleven month period grew 22.2 percent to US$ 9.58 billion. Tea export earnings grew 1.9 percent to US$ 1.34 billion and apparels grew 24.6 percent to US$ 3.8 billion. The import bill grew by 53.2 percent to US$ 18.4 billion. The petroleum bill grew 54 percent to US$ 4.1 billion.
"The trade deficit for the first eleven months of 2011 stood at US$ 8,835 million, a significant portion of which was on account of imports of infrastructure related to projects of the government that have been funded mainly by foreign loans. In that context, the total inflows to the government, including the proceeds of the International Sovereign Bond issue, amounted to US dollars 4,027 million, during the first eleven months of 2011," the Central Bank said releasing the External Sector Performance report for November 2011.
"During 2011, earnings from tourism grew at a healthy rate of 44.2 per cent to US$ 830 million in 2011 compared to 2010. The tourist arrivals in 2011 increased by 30.8 per cent to 855,975 compared to that of 2010. The cumulative inflows on account of workers’ remittances grew at 23.8 per cent to US$ 4,639 million for the first eleven months of 2011. The expansion in exports of services and increased workers’ remittances helped contain the impact of the trade deficit, thereby sharply reducing the deficit of the current account to approximately US$ 3,999 million for the first eleven months of 2011. Inflows on account of short-term foreign financing obtained by commercial banks and funds to be secured from abroad as Tier II capital of banks are expected to further strengthen inflows to the country, as noted by the fact that banks have already contracted US$ 490 million as short-term facilities extending up to one year. Meanwhile, several banks have also already negotiated Tier II capital which could potentially reach about US$ 1 billion this year.
"By end November 2011, gross official reserves, excluding Asian Clearing Union (ACU) balances, amounted to US$ 6,201 million. By end November 2011, total external reserves, which includes gross official reserves and foreign assets of commercial banks amounted to US$ 7,541 million. In terms of months of imports, gross official reserves and total external reserves by end November 2011 were equivalent to 3.8 months and 4.6 months, respectively," the Central Bank said.
"Expenditure on imports in November 2011 was mainly driven by increases in imports of intermediate and investment goods. The intermediate goods imports increased year-on-year by 81.1 per cent, led by petroleum, textiles and clothing and fertiliser imports. The import expenditure on petroleum increased mainly due to higher average import price of crude oil of US$ 113 per barrel in November 2011 compared to US$ 84.85 per barrel for the corresponding month of 2010. Fertiliser imports grew in terms of both prices and volumes, by 326 per cent and 99.9 per cent, year-on-year, respectively, and the sharp increase of volume were mainly due to expansion of fertiliser subsidy to cover all crops. Expenditure on imports of investment goods increased substantially by 91.9 per cent while the non-food consumable imports increased by 48.2 per cent, year-on-year, in November 2011.
"In cumulative terms, for the first eleven months of 2011, earnings from exports increased by 22.2 per cent to US$ 9,581 million while the expenditure on imports, driven by substantial increase in investment goods and the sharp increase in price and volume of petroleum imports, increased by 53.2 per cent to US$ 18,417 million, compared with the corresponding period of 2010. In addition, gold and motor vehicle imports contributed to the overall increase in import expenditure. The gold imports increased more than six fold to US$ 553 million while the expenditure on imports of motor vehicle almost doubled to US $ 913 million during the first eleven months of 2011, compared with the same period of 2010," the Central Bank said.
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