Wednesday July 1, 2026 1:19 pm ECONOMYNEXT – Sri Lanka’s current account recorded a deficit for the second consecutive month in May 2026, as the external sector performance continued to reflect the impact of the war in West Asia, the central bank said. “The external current acco…
Wednesday July 1, 2026 1:19 pm
ECONOMYNEXT – Sri Lanka’s current account recorded a deficit for the second consecutive month in May 2026, as the external sector performance continued to reflect the impact of the war in West Asia, the central bank said. “The external current account recorded a deficit of US$ 194 million in May 2026, mainly driven by the widened trade deficit, a moderation in the services surplus, despite an increase in workers’ remittances compared to a year earlier.” The external current account deficit during January to May amounted to 97 million dollars, the CBSL said. The merchandise trade deficit widened in May, as import expenditure increased at a faster pace than export earnings. The cumulative trade deficit widened to 4.7 billion dollars during January–May, compared to 2.7 billion dollars in the corresponding period last year. Sri Lanka’s spending on fuel imports increased by 112 percent year-on-year to 536 million dollars in May, driven by the increase in oil prices and volumes. “However, on month-on-month basis, expenditure on fuel imports reduced by 39.5% in May 2026.” The country’s spend on vehicle imports increased by 20 percent month-on-month to 250 million dollars in May, bringing the cumulative expenditure on motor vehicle imports to 1,071 million dollars during January–May. Trade deteriorated on a year-on-year basis in the month, as the increase in import prices outpaced the increase in export prices. “Similarly, the terms of trade deteriorated during January–May 2026 compared to the corresponding period of the previous year.” The surplus in the services account recorded a contraction of 36.8 percent year-on-year, to 143 million dollars in May, CBSL said, reflecting a higher growth in services outflows compared to inflows to the services account. “The cumulative surplus also contracted by 20.8% during January to May 2026 compared to the corresponding period of 2025. ” Tourist arrivals grew 9.6 percent in May, compared to in 2025, but earnings were estimated at 156 million dollars, reflecting a year-on-year decline of 5.1 percent. “The cumulative earnings during first five months of 2026 declined by 11.9% amounting to US$ 1,360 million compared to the corresponding period of the previous year.” Workers’ remittances in May were 847 million dollars. Remittances in the first five months of the year increased by 26 percent year-on-year to 3.9 billion dollars. Foreign investments in the government securities market recorded a net outflow of 60 million dollars. Foreign investments in the Colombo Stock Exchange (CSE), including both primary and secondary market transactions, also recorded a net outflow of 23 million dollars. Gross official reserves (GOR), including the swap facility with the People’s Bank of China (PBOC), was 6.9 billion dollars by end May. As of end June 2026, the Sri Lanka rupee depreciated by 7.9 percent against the US dollar on a year-to-date basis. (Colombo/Jul1/2026)