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Tuesday April 16th, 2024

Sri Lanka trade deficit up 77-pct to Feb, imports surge, rupee appreciates

ECONOMYNEXT – Sri Lanka’s trade deficit widened 817 percent to 319 million dollars in February 2024, from 39 million dollars and imports rose 35 percent, official data showed, while the rupee was allowed to appreciate amid deflationary monetary policy.

In February merchandise exports went up 7.9 percent to 1,059 million dollars, and imports surged 35 percent to 1378 million US dollars, central bank data showed.

In the two months to February 2024, exports to went up 3.6 percent to 2,030 million US dollars, imports went up 18.2 percent to 2,890 million dollars.

The trade deficit widened 77 percent to 860 million dollars in the two months from 484 million dollars last year.

The rupee was allowed to appreciate to 310 to the US dollar by end February from 323 to the US dollar by in December 2024 as the central bank operated deflationary policy and mopped up liquidity from dollar purchases.

In Sri Lanka there is a deeply Mercantilist belief that trade deficits or imports contribute to currency weakness and monetary instability, which can only be done by domestic operations (note issue) of the central bank.

The service account balance was a 400 million dollar net inflow with 346 million dollars of estimated tourism earnings. Services were a net inflow of 593 million dollars and an outflow of 193 million dollars the central bank said.

Remittances were 476 million dollars through official channels.

Sri Lanka has collected reserves and had also been repaying debt to multilateral and India at a time when other bilateral creditors had halted projects. Financial account data was not given.

Some fuel settlements also do not take place at the moment.

Amid deflationary policy, the overall balance of payments was a positive 247 million dollars in the two months to February 2024. (Colombo/Mar29/2024)

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IMF urged Sri Lanka to preserve “hard earned gains” after economic crisis: State FinMin

ECONOMYNEXT – The International Monetary Fund has urged Sri Lanka to preserve the hard earned gains after an unprecedented economic crisis under the global lender’s programme, State Finance Minister Shehan Semasinghe said.

The Sri Lankan delegation led by Shehan Semasinghe met Kenji Okamura, the Deputy Managjng Director of the IMF on the first day of the IMF and  World Bank Spring meeting.

“Mr. Okamura commended the Sri Lankan authorities on strong programme implementation and excellent reform progress. He emphasised the need to preserve the hard earned gains Sri Lanka has experienced since the beginning of the IMF programme and continue strong ownership,” the State Minister said in his X (Twitter) platform.

He said the Sri Lankan delegation including Central Bank Governor Nandalal Weerasinghe and Secretary to the Treasury Mahinda Siriwardana explained the recent socio-economic developments to Okamura.

He also affirmed the IMF top official on the authorities’ commitment to ensuring continuity and consistency of macroeconomic policies and reforms undertaken under the programme. (Colombo/April 16/2024)

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Sri Lanka State FinMin meets BCIU in US; discusses post-crisis investment prospects 

ECONOMYNEXT – Sri Lanka’s State Finance Minister Shehan Semasinghe met Business Council for International Understanding( BCIU) in Washington on the sideline of the IMF/World Bank Spring Meetings late on Monday and discussed investment prospects in the island nation which is gradually recovering from an unprecedented economic crisis.
“Our discussion centered on the potential that Sri Lanka offers for international investors. Explored various sectors, including education, tourism, renewable energy, agriculture and technology, where strategic investments can drive sustainable economic growth and development,” Semasinghe said in his X (Twitter) platform. 
“We reviewed the current macro-economic landscape of Sri Lanka, including recent reforms that have transformed to results. Glad to concluded the forum by marking constructive dialogue and a shared commitment to support the economic development of Sri Lanka.” 
“We thank participants, stakeholders holders and global partners for the significant interest shown in unlocking the full potential of the Sri Lankan economy and fostering greater international understanding and cooperation.” (Colombo/April 16/2024) 
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India allows Sri Lanka to import 10,000MT of onions

ECONOMYNEXT – India has relaxed an export ban allowing 10,000 metric tonnes of onions to be shipped to Sri Lanka, the Indian High Commission in Colombo said.

“The exemption for Sri Lanka reiterated India’s Neighbourhood First policy, adding to the Sinhala and Tamil New Year festivities here,” the statement said.

Onion prices went up in Sri Lanka after India and Pakistan banned exports.

The Directorate General of Foreign Trade has issued a notice allowing National Co-operative Exports Limited to ship 10,000 MT of onions.

The UAE has also been allowed to import 10,000MT of onions on top of 24,400MT already permitted.

A large Indian and South Asian expat community lives in the UAE. (Colombo/Apr15/2024)

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