Balance of payments: External current account returns to surplus
Sri Lanka’s external current account recorded a surplus of $ 133 million in August following four consecutive months of deficits. The surplus was supported by the lower trade deficit compared to recent months, reflecting lower import expenditure.
The current account recorded a cumulative deficit of $ 291 million during January-August, reflecting pressures on the external sector stemming from the escalation of the Middle East conflict.
On a year-on-year basis, the merchandise trade deficit widened in August 2026, driven by higher import expenditure and lower export earnings. Meanwhile, the cumulative trade deficit widened to $ 7.2 billion during January–August 2026, compared to $ 4.3 billion in the corresponding period of 2025.
Monthly fuel import expenditure declined for the fourth consecutive month in August 2026. Cumulative fuel import expenditure amounted to approximately $ 4 billion during January–August 2026, recording a 61.6% (year-on-year) increase compared to the corresponding period of 2025.
Expenditure on motor vehicle imports, including both personal and commercial vehicles, amounted to $ 189 million in August 2026, recording a 24.2% decline compared to August 2025. Meanwhile, cumulative expenditure on motor vehicle imports amounted to $ 1,684 million during January–August 2026.
The terms of trade deteriorated on a year-on-year basis in August 2026, as import prices increased at a faster pace than export prices. Similarly, the terms of trade deteriorated during January–August 2026 compared to the corresponding period of 2025.
The services account recorded a surplus of $ 220 million in August 2026, a 24.4% reduction compared to August 2025. With the continued moderation in the monthly services account surplus, the cumulative services account surplus declined by 21.4% to $ 2.1 billion during January-August 2026 on a year-on-year basis.
Tourist arrivals declined by 3.3% year-on-year in August 2026. Total arrivals during January-August 2026 declined by 2.0%, compared to the corresponding period of 2025. Meanwhile, tourism earnings were estimated at $ 264 million in August 2026, reflecting a 2.1% increase from a year earlier. Cumulative tourism earnings during January-August 2026 declined by 10.0% to $ 2.1 billion, compared to the corresponding period of 2025.
Workers’ remittances increased by 10.0% year-on-year to $ 749 million in August. Consequently, cumulative remittances during January-August rose by 19.8% on a year-on-year basis to $ 6.1 billion.
Foreign investment in the government securities market recorded a net inflow of $ 70.2 million, while foreign investment in the Colombo Stock Exchange (CSE), including both primary and secondary market transactions, recorded a net outflow of $ 58.1 million during August.
Gross official reserves (GOR), including the swap facility with the People’s Bank of China (PBOC), increased to $ 6.9 billion by end August, supported by foreign exchange purchases by the Central Bank.
By end-September, the Sri Lankan Rupee depreciated by 6.3% against the US Dollar on a year-to-date basis.
Source: The Morning
