Sri Lanka’s trade deficit had continued its improving trend observed in recent months recording US $ 617 million during the month of January 2019, latest external sector data showed. The data noted that it is improving compared to a deficit of US $ 701 million in December 2018, and US $ 1,049 million in January 2018.

“This significant reduction in the trade deficit was due to the combined effect of higher earnings from exports and a notable deceleration in import expenditure exports grew by 7.5%” Central Bank said in releasing latest external sector data.

Report said that Tourist arrivals grew by 2.2% (year-on-year) in January 2019, resulting in earnings from tourism of US $ 458 million during the month. Meanwhile workers’ remittances in January 2019 amounted to US $ 545 million, a notable reduction compared to January 2018. In the financial account, net outflows from the government securities market moderated in January 2019, compared to the second half of 2018.

Central Bank further added that the government repaid the International Sovereign Bond (ISB) of US $ 1 billion that matured in January 2019, as scheduled and the significant pressure on the exchange rate that was witnessed in the latter part of 2018 eased with a notable reversal during January 2019. Accordingly, the Sri Lankan Rupee appreciated by 1.6% in January 2019 from LKR 182.75 per US dollar at end December 2018 to LKR 179.88 by end January 2019.

“The exchange rate appreciated to LKR 174.65 per US dollar by 17 April 2019, recording an appreciation of 4.6%” statistics added. With the settlement of the maturing ISB, the country’s gross official reserves had declined to US $ 6.2 billion at end January 2019. Consequently, Sri Lanka successfully issued ISBs amounting to US $ 2.4 billion in March 2019, increasing the gross official reserves to US $7.6 billion by end March 2019, which was equivalent to an estimated 4.3 months of imports.

- Reporting by Devendra Francis