Sri Lanka's debt office completed additional bond sales this week while economic data revealed persistent trade deficits and declining tourism earnings, though construction activity and remittances showed strength.
Sri Lanka's Public Debt Management Office has sold an additional 5 billion rupees in Treasury bonds on tap, bringing total bond sales for the week to 55 billion rupees. The extra sales came through a 2030-maturity bond yielding 10.54 percent and a 2035-maturity bond at 11.70 percent, following an initial 50-billion-rupee auction the previous week.
Economic data released by the central bank painted a concerning picture of the country's external position. The current account deficit reached 142 million dollars in July alone, marking the fourth consecutive month in deficit. For the January-July period, the cumulative deficit stood at 387 million dollars, reversing a surplus from the same period in 2025. The merchandise trade deficit has widened significantly, with the total trade gap reaching 6.5 billion dollars for the first seven months of 2026, compared to 3.9 billion dollars in the previous year. Fuel import costs surged 68 percent year-on-year in July, while motor vehicle imports also contributed to the widening deficit.
Tourism performance deteriorated further, with earnings falling 10.3 percent to 286 million dollars in July and declining 11.5 percent for the January-July period. Tourist arrivals dropped 1.7 percent year-on-year. However, worker remittances provided some relief, rising 21.4 percent to 5.4 billion dollars for the seven-month period. On the domestic front, the construction sector expanded in July with a Purchasing Managers Index of 61.4, driven by sustained project inflow despite bitumen supply constraints and skilled labour shortages.
The Colombo Stock Exchange showed modest gains, with the All Share Price Index rising 0.23 percent. The rupee strengthened slightly to 327.90-328.05 against the US dollar, while official reserves stood at 6.6 billion dollars at month-end.