Sri Lanka’s Balance of Payments (BOP) has recorded an overall surplus of around US dollars 2.0 billion by end October 2017 with Sri Lanka’s external sector exhibiting a significant improvement in October 2017, with a notable decline in the trade deficit and continued inflows to the financial account of the Balance of Payment.
According to statistics released by the Central Bank on Friday, higher export earnings, which recorded double digit growth for the fourth consecutive month at 14%, and a deceleration in import expenditure by 0.2% resulted in a significant year-on-year decline in the trade deficit in October.
“Earnings from tourism increased moderately, while workers’ remittances further declined, owing to adverse economic and geopolitical conditions in the Middle Eastern region.
“Inflows to the financial account of the BOP continued during the month amidst increased foreign investments in the Colombo Stock Exchange (CSE) and the government securities market,” the Central Bank outlined.
Meanwhile, the level of gross official reserves increased to US dollars 7.5 billion at end October 2017, particularly with the absorption of foreign currency liquidity from the domestic foreign exchange market by the Central Bank.
“Maintaining the growth momentum, earnings from exports increased further, registering double-digit growth in October 2017. This was mainly due to higher earnings from industrial exports, reflecting the increase in garment exports to the USA and the EU market,” the Central Bank said.
It noted that garment exports to the USA increased by 14.7 per cent, in October 2017 while those to the EU increased by 8.0 per cent with the benefit of GSP+ facility taking effect, reflecting increased demand for garments. With the healthy performance registered in vegetable, fruit and nut preparations, earnings from food, beverages and tobacco increased during the month. Earnings from rubber products also rose, mainly due to higher earnings from the export of rubber tyres. Export earnings from petroleum products also increased significantly owing to higher export volumes and prices of bunker and aviation fuel. Meanwhile, earnings from agricultural exports continued to increase in October 2017 as well.
“An impressive growth in tea exports, with a 13.3 per cent increase in the average tea export price and 11.3 per cent growth in export volume, mainly contributed to higher earnings in agricultural exports. Earnings from spices increased with higher volumes and prices of cinnamon.
“Reflecting the positive impact of the removal of the ban on exports of fisheries products to the EU market and the restoration of the GSP+ facility, earnings from seafood exports increased considerably with a 145 per cent, year-on-year growth in exports to the EU market,” the Central Bank said.