ECONOMYNEXT – Sri Lanka’s imports picked up to 1,610 million US dollars, up from 1,336 million dollars last year, as remittances and tourism flows boosted available dollars to spend, even as exports fell, official data shows.
In October exports fell to 928 million US dollars from 1,052 million by tourism picked up to 137 million US dollars from 55 million US dollars, and remittances rose to 683 million US dolalrs from 284 million dollars.
Total current inflows from exports, tourism and remittances were 1,748 million US dollars, compared to imports of 1,610 million US dollars.
Imports are value with freight (CIF), while exports are valued free on board (FOB).
Since dollar recipients usually save, for all inflows to go out the banking system has to give credit.
Private credit is also starting to pick up.
If the government take budget support loans and spends them domestically instead of repaying foreign debt or keep them as reserves, imports will go up, usually triggering a current account deficit. Foreign direct investments can also trigger a current account deficit.
A rise in imports is generally a sign of an economic recovery, unless they are from central bank liquidity injections (inflationary policy) made to cut rate to sterilize interventions and maintain mis-targetted rates.
Unless the central bank injects money to enforce rate cuts or buys dollars in excess of deflationary policy the exchange rate will also be stable and inflows will match outflows.
The October imports at 1,610 million US dollars was the highest since April 2022, when official imports were reported as 1,699 million US dollars when Governor Weerasinghe hiked rates freed Treasury bill and bond rates allowing them to be sold to the public.
Imports hit as much as 2.2 billion at the peak of the last currency crisis as interventions were sterilized to keep rates down. (Colombo/Dec01/2023)