Oct 19, Colombo: Sri Lanka’s trade deficit widened in August 2021 as the increase of import expenditure outpaced the increase of export earnings, the Central Bank reported Tuesday in its External Sector Performance review for the month.

The deficit in the trade account widened on a year-on-year basis to US$ 586 million in August 2021, compared to the deficit of US$ 342 million recorded in August 2020.

Greater increase in import expenditure as against the increase in export earnings in August 2021 over August 2020 resulted in the widening of the trade deficit, the Central Bank said.

The cumulative deficit in the trade account from January to August 2021 also widened to US$ 5.509 billion from US$ 3.812 billion in the corresponding period of 2020..

Earnings from exports in August 2021 grew by 16.2 percent over August 2020 to reach US$ 1.100 billion, reaching the highest level of exports recorded in a month of August.

Earnings from the export of industrial goods increased by 17.5 per cent in August 2021 to US$ 856.8 million, compared to US$ 729.0 million in August 2020.

Total earnings from the export of agricultural goods in August 2021 increased by 10.9 percent to US$ 239.4 million, compared to August 2020, mainly due to the increase in export earnings from tea, coconut, minor agricultural products, seafood and rubber. Cumulative export earnings increased by 22.6 percent during January-August 2021, amounting to US$ 7.903 billion, compared to US$ 6.445 billion recorded in the corresponding period in 2020

Expenditure on merchandise imports in August 2021 increased notably by 30.8 percent to US$ 1.687 billion from import expenditure of US$ 1.289 billion in August 2020.

Cumulatively, in the first eight months of 2021 import expenditure increased by 30.7 percent to US$ 13.411 billion compared to US$ 10.257 billion for the same period in 2020.

Earnings from tourism, which are estimated based on tourist arrivals, amounted to US$ 7 million in August 2021. Cumulative earnings from tourism are estimated at around US$ 33 million during the first eight months of 2021 as opposed to US$ 682 million recorded in the same period in 2020.

Workers’ remittances decreased by 32.8 percent in August 2021, year-on-year, to US$ 447 million. Workers’ remittances during the first eight months of the year declined by 2.8 percent, year-on-year, to US$ 4.224 billion.

Cumulative net outflows from the government securities market during the eight months up to August 2021 amounted to US$ 26 million.

Gross official reserves increased to US$ 3.5 billion by end August 2021, from US$ 2.8 billion at end July 2021. This increase was due to the receipt of the SDR allocation of the IMF and the initial disbursements under the bilateral currency swap arrangement between the Central Bank of Sri Lanka and the Bangladesh Bank.

The Sri Lankan rupee depreciated by 4.8 per cent against the US dollar during August. The rupee recorded a depreciation of 6.8 percent against the US dollar during the year up to 18 October 2021.