Cabraal : No need to worry about Negative Foreign Assets

COLOMBO (News 1st); Central Bank data reveals that the net-foreign assets position of the Central Bank turned negative in August this year.

As of the end of August this year, the Central Bank reported a deficit of Rs. 83.9 Billion in its net- foreign asset position, which is equivalent to approximately 400 Million US Dollars.

The net foreign asset position of the central bank has been on the declining trend for the past several months.

The foreign assets deficit reported at the end of August is a significant drop compared to the year opening surplus of 2.1 Billion US Dollars.

The net- foreign assets position of the country's banking system also deteriorated further during the month of August to a deficit of 3.5 Billion US Dollars, from a deficit of 1.6 Billion US Dollars reported in January this year.

Central Bank Governor Ajith Nivard Cabraal told a briefing that since liberalization net foreign assets have been in negative positions at different times.

"But these are essentially temporary and those can change with one transaction. If we do one swap in the next few weeks, that entire situation can completely change. That's why it's sometimes a little misleading," he said.

Cabraal assured that the Central Bank is very much on top of the situation and will be dealing with it.

Economists warn that the lack of sufficient foreign assets in the banking system will disrupt the repayment of short-term liabilities.