Sri Lanka's trade deficit narrows amid COVID-19 shocks in March

Sri Lanka's trade deficit narrows amid COVID-19 shocks in March

Agency News

Colombo, Jun 2 : Sri Lanka's trade deficit narrowed to 549 million US dollars in March compared to 592 million US dollars in the same period last year amid shocks to the external sector from the COVID-19 pandemic, the Central Bank of Sri Lanka (CBSL) said on Monday. "The COVID-19 pandemic and the imposition of a partial lockdown in Sri Lanka in the second half of March 2020 affected external sector performance," the CBSL said in a press release.

"Breakdown in supply and demand chains along with the interruption of domestic production processes resulted in a notable decline in merchandise exports as well as merchandise imports. However, with a greater decline in the expenditure on imports compared to the decline in earnings from exports, the trade deficit narrowed over the same period in 2019," the statement added. Income from tourism and worker remittances, two of Sri Lanka's largest foreign exchange earners, saw a steep year-on-year decline of 70.8 percent and 13.9 per cent respectively. Earnings from tourism dropped to 135 million US dollars while worker remittances dropped to 492 million US dollars.

The report showed a net outflow of 261 million US dollars in foreign investment in rupee denominated government securities in March, 2020. However, the country saw a gross inflow of 588 million US dollars in long-term loans in the same period, including a syndicated loan facility of 500 million US dollars from the China Development Bank. The CBSL said the total foreign assets, including official reserves and foreign assets of the banking sector, stood at 10.7 billion US dollars as at end-March 2020 -- equal 6.5 months of imports. (UNI)