The Central Bank sees Sri Lanka’s current account deficit moving below the projected 2.3 percent of GDP this year, as the trade deficit slashed to US $ 1.06 billion in the first two months of the year, compared to US $ 2.1 billion recorded in the January to February period last year.
Central Bank Governor Dr. Indrajit Coomaraswamy said that the government was earlier targeting a current account deficit to be contained to 2.3 percent of GDP. However, as the imports have declined significantly while the exports have continued to grow so far in the year, he said that the Sri Lanka could expect the current account deficit to be below 2.3 of GDP, this year.
According to the provisional figures, the trade deficit contracted significantly to US $ 451 million, the lowest since October 2013, compared to US $ 1.06 billion in February 2018, as the import expenditure declined by 27.6 percent year-on-year (YoY) in February, while the export earnings grew by 7.2 percent YoY to US $ 981 million.
The significant reductions in the import bill includes a 57.7 percent reduction in personal vehicle imports, 73.8 percent reduction in fertiliser imports, 99.3 percent reduction of gold and 10.6 percent decline in the fuel import bill in February, compared to the corresponding period. Meanwhile, the exports of seafood, spices, apparel and textiles grew by double digits while the exports of tea, petroleum products, leather, travel goods and footwear declined. As the external conditions improve, the rupee has appreciated by 4.5 percent against the US dollar as of April 8 this year, performing above most of its regional peers.