The deficit in the merchandise trade account widened to $ 604 million in July 2024 from $ 367 million recorded in July 2023, driven by a relatively larger expansion in import expenditure, according to the Central Bank of Sri Lanka.
The cumulative deficit in the trade account during January to July 2024 widened to $ 3,144 million from $ 2,657 million recorded over the same period in 2023.
Terms of trade, i.e., the ratio of the price of exports to the price of imports, deteriorated by 1.1% in July 2024 compared to July 2023, as the decline in the prices of exports surpassed the decline in the prices of imports.
The export volume index improved by 15.7%, while the unit value index declined by 4.3%, implying that the increase in export earnings in July 2024 compared to July 2023 can be attributed to higher export volumes.
Similarly, the import volume index increased by 29.1%, while the unit value index declined by 3.2%, implying that the increase in import expenditure in July 2024 compared to July 2023 was also driven by the volume effect.
Total inflows to the services sector, excluding earnings from tourism, were estimated at $ 337 million in July 2024 in comparison to $ 311 million in July 2023.
Services inflows to computer and IT/BPO related services and sea transport sector were the main contributors to the increase in inflows to the services sector excluding earnings from tourism in July 2024.
Total services sector outflows were estimated at $ 290 million in July 2024, in comparison to $ 161 million in July 2023. Major contributors to the increase in outflows from the services sector in July 2024 were overseas travel, sea transport and air transport.
Foreign investments in the government securities market recorded a net outflow of $ 23 million in July 2024 resulting in a cumulative net outflow of $ 221 million during January-July 2024.
Meanwhile, foreign flows to the CSE, including both primary and secondary market transactions, recorded a net inflow of $ 12 million in July 2024 and a cumulative net inflow of $ 32 million during January-July 2024.
Gross official reserves (GOR) stood at $ 5.7 billion at end July 2024 compared to $ 4.4 billion in end December 2023. This includes the swap facility from the People’s Bank of China (PBOC), which is subject to conditionalities on usability.
Net purchases of foreign exchange from the domestic foreign exchange market by the Central Bank amounted to $ 121 million (based on trade date) in July 2024.
Meanwhile, import coverage of GOR (including the PBOC swap) amounted to 3.8 months of imports as at end July 2024.