The cumulative trade deficit remained modest so far during 2023. The trade deficit in May 2023 widened, compared to a year ago, for the first time since February 2022.

Workers’ remittances in May 2023 recorded higher than that of the previous month. Earnings from tourism recorded a robust growth despite being lower than April 2023 due to seasonal affects.

There was a notable appreciation of the exchange rate by 8.8 per cent during May 2023.

Foreign investments in the government securities market recorded a notable net inflow during May 2023.

The receipt of USD 350 million from the Asian Development Bank (ADB) as well as substantial net purchases of forex by the Central Bank from the market, resulted in the gross official reserve level (GOR) increasing to about US dollars 3.5 billion by end May, compared to US dollars 2.8 billion as at end April 2023.

The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 31 May 2023, decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 250 basis points to 13.00 per cent and 14.00 per cent, respectively. The Board arrived at this decision with a view to easing monetary conditions in line with the faster than expected slowing of inflation, gradual dissipation of inflationary pressures and further anchoring of inflation expectations. The commencing of such monetary easing is expected to provide an impetus for the economy to rebound from the historic contraction of activity witnessed in 2022, while easing pressures in the financial markets.