By:Staff WriterColombo (LNW): Sri Lanka’s Central Bank claims the island nation’s trade deficit widening for four years including 2023, despite the recent lifting import ban on certain items., a top official said, as the crisis-hit nation is compelled to relax its import barriers.
Since the country declared an unprecedented sovereign debt default last year after the $77.1 billion economy fell short of foreign currency, the Central Bank has imposed strong restrictions on imports.
The deficit in the merchandise trade account amounted to US dollars 447 million in May 2023, compared to US dollars 403 million recorded in May 2022, recording a year-on-year expansion for the first time since February 2022, central bank announced.
The cumulative deficit in the trade account during January to May 2023 was US dollars 1,926 million, a sizeable decline from US dollars 3,528 million recorded over the same period in 2022
Reflecting the ongoing recovery in economic activities, Sri Lanka’s imports expanded moderately in May, marking the first year-on-year increase since February 2022.
Earnings from merchandise exports declined by 2.7 per cent in May 2023, year-on year, to US dollars 1,019 million, while increasing notably compared to April 2023.
The decline in earnings from industrial exports mainly contributed to the decline in export earnings amidst improved agricultural exports. Meanwhile, cumulative export earnings during January to May 2023 recorded at US dollars 4,866 million, a decline of 7.7 per cent over the same period in the last year.
Earnings from the exports of industrial goods declined in May 2023, compared to May 2022, mainly due to the lower exports of garments to most of the major markets (the USA, the EU, and the UK).
Similarly, a sizeable decline was recorded in the exports of petroleum products (led by lower export volumes and prices of bunker fuel exports), textiles (primarily, cotton fabric), printing industry products and transport equipment.
However, earnings from animal fodder (mainly, wheat residues); machinery and mechanical appliances (mainly, mechanical appliances parts); food : Expenditure on merchandise imports increased marginally to US dollars 1,466 million in May 2023, compared to US dollars 1,451 million in May 2022, recording the first year-on year increase since February 2022.
As per the latest data from the Central Bank, imports in May increased to $ 1.46 billion, indicating the first increase in 15 months.
Noting that the ongoing recovery in economic activities played a crucial role in driving the increase in import expenditure, the Central Bank said the rise in import expenditure was primarily driven by higher spending on consumer goods, offsetting the decline in expenditure on intermediate and investment goods imports.
However, cumulative import expenditure from January to May plunged by 22.8% YoY to $ 6.79 billion from the corresponding period in 2022.