The merchandise trade deficit widened during the eight months ending August 2024 (provisional) compared to the same period in 2023, driven by a larger expansion in import expenditure relative to export earnings.

Earnings from tourism and workers' remittances improved during this period, strengthening the external current account. Meanwhile, despite intermittent volatility, the Sri Lanka rupee appreciated against the US dollar by over 7 per cent thus far during 2024, and the Central Bank purchased a significant amount of foreign exchange from the domestic market to bolster Gross Official Reserves (GOR).

GOR stood at US dollars 6.0 billion (including the swap facility from the People's Bank of China) at end August 2024. The continuation of the Extended Fund Facility arrangement with the International Monetary Fund (IMF-EFF) and early finalisation of the debt restructuring process will support the strengthening of external sector buffers further.