Sri Lanka’s external sector remained subdued with a widening of the trade deficit, a moderation in tourist earnings and a modest growth in workers’ remittances in February 2017. A considerable widening in the trade deficit was observed in February with a decline in exports amidst increased imports mainly due to higher imports of fuel and rice. Earnings from tourism dipped with a marginal decline in tourist arrivals during the month, which could partly be attributed to the day time closure of the Bandaranayke International Airport (BIA) for resurfacing of the runway. The growth in workers’ remittances in February remained below the expected level. Further, the financial account was adversely affected by significant outflows from the government securities market during the month. However, some foreign investments were observed in the Colombo Stock Exchange (CSE) with inflows to both primary and secondary markets during the month.
The pressure on the external account has been eased somewhat in subsequent months by improved export performance; a reversal of capital outflows with investments in the stock exchange and inflows to the government securities market as well as proceeds from the International Sovereign Bond of US dollars 1.5 billion and a syndicated loan of US dollars 450 million.