COLOMBO : Sri Lanka's overall balance of payments showed a 100 million dollar surplus for the two-months to February thanks to increased private remittances, the central bank said.

The surplus was possible despite an external trade deficit, the bank said in its monthly review of the economy. It did not give the absolute numbers for trade in the first two months of the year.

However, the bank said the trade deficit may widen this year, weighed down by a hefty oil import bill, but higher inward remittances which marked a 26 percent increase to 213 million dollars in January alone should help contain the shortfall.

Sri Lanka has also benefited from inflows of tsunami-related aid. The balance of payments recorded a 501 million dollar surplus in 2005.

Sri Lanka's total foreign reserves were 4.2 billion dollars, or sufficient to finance 5.6 months of imports as at end-January, the central bank said.

Meanwhile, the bank left key interest rates unchanged, saying that inflation was under check. A quarter percentage point increase in rates in December had put the brakes on money supply growth, the bank said.

It said inflation declined in February due to the rate increase in December, stability in the exchange rate and improvements in domestic supply conditions.

Inflation declined from 11.1 percent in January to 10.3 percent in February, the bank said.

- AFP /ct