Sri Lanka’s imports, trade gap up amid financial account inflows

ECONOMYNEXT – Sri Lanka’s imports rose 10.5 percent to 1,666.7 million US dollars in September, with investment and intermediate goods rising, despite a fall in consumer goods, helped by stronger financial sector inflows, despite the collection of foreign reserves.

Consumer goods fell 12.2 percent to 328.9 million US dollars with most consumer goods falling except rise, which rose to 22 million US dollars from 1.4 million dollars a year earlier.

Intermediate goods rose 22.4 percent to 949.4 million US dollars, with fuel imports up 69.3 percent to 298.5 million US dollars.

Sri Lanka has not raised fuel prices, to allow more non-fuel imports to compress, and the hit has been taken through the credit system through reduced profits or losses at state-run Ceylon Petroleum Corporation and Ceylon Electricity Board.

Investment goods rose 7.9 percent to 385.9 million US dollars.

In the first nine months of the year, imports rose 9.7 percent of 15,263.7 million US dollars. Exports rose 8.2 percent 8,424 million rupees.

The trade gap rose to 6,840 million US dollars from 6,125 million dollars, with strong inflows to the financial account.

"Despite the slower than expected improvement in the current account, the financial account of the BOP was strengthened during the month of September with continuous foreign inflows," the central bank said.

"Continuing the positive trend witnessed since March 2017, foreign investments to the government securities market recorded net inflows for the seventh consecutive month reflecting positive investor sentiment. In addition, long term loans.

"In addition, long term loans to the government increased on a net basis during the first nine months of the year.





EN’s economic columnist Bellwether say the current account deficit of the balance of payments can expand further if the financial account remains strongly positive, through the collection of foreign reserves can be a moderating influence.

Sri Lanka’s current account deficit narrowed during a balance of payments crisis driven by money printing and foreign reserve declines as foreign investors in bonds fled in 2015.

Imports tend to rise when there are strong inflows to the financial account, widening the current account deficit, as the government in particular deficit spends with foreign borrowings. (Colombo/Nov28/2017)

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