Sri Lanka's external current account fell into deficit for the fourth straight month in July 2026, with the central bank reporting a shortfall of 142 million dollars as imports outpaced exports.
Sri Lanka's current account deficit deepened in July 2026, according to data released by the Central Bank of Sri Lanka. The country recorded a monthly deficit of 142 million dollars, extending a streak of deficits to four consecutive months. Over the first seven months of 2026, the cumulative deficit reached 387 million dollars, contrasting sharply with a surplus recorded during the same period in 2025.
The widening deficit was primarily driven by a significant deterioration in the merchandise trade balance. The total trade deficit for January through July expanded to 6.5 billion dollars, nearly double the 3.9 billion dollars recorded in the corresponding period of 2025. Rising import expenses coupled with declining export revenues contributed to this imbalance. Fuel costs emerged as a major factor, with the central bank reporting a 68 percent year-on-year increase in fuel import prices during July alone. The seven-month fuel import bill reached approximately 3.6 billion dollars, representing a 59.9 percent increase from the prior year. Motor vehicle imports also added pressure, totaling 1.5 billion dollars for the January-July period.
The services sector provided some relief, though with diminishing returns. The services account registered a surplus of 244 million dollars in July, buoyed primarily by tourism earnings. However, this represented a 23 percent decline from the previous year. Tourism arrivals fell 1.7 percent year-on-year in July, and tourism earnings dropped 10.3 percent to 286 million dollars. For the seven-month period, tourism earnings declined 11.5 percent to 1.8 billion dollars. Workers' remittances proved more resilient, rising 11.5 percent in July to 778 million dollars, with year-to-date remittances climbing 21.4 percent to 5.4 billion dollars. The rupee depreciated 5.5 percent against the US dollar during the year-to-date period, while gross official reserves stood at 6.6 billion dollars by end-July.