Sri Lanka’s trade deficit improving

H.D.H Senewiratne

Sri Lanka’s trade deficit is slowly getting stable due to the drop of imports as against the export revenue, a top government official said.

“Government regulations on imports during the last few months have had an impact on imports considerably, while major exports including the apparel sector and tea had come down due to the recession in USA and the Euro Zone,” Deputy Secretary to the Treasury S.R Attigala said.

According to statistic, Sri Lanka has earned US $ 4.96 billion as export earnings during the first half of 2012, a 2 percent drop compared to what the country has earned during the same period last year. During the first half of 2011, the country’s export earnings stood at just over US$ 5 billion. Attigala said that due to the economic down turn in USA and the Euro zone, the local apparel exports had dropped by 5 percent. Further, due to the on going drought, the tea industry have also had an impact negatively, he said.

Apart from that, import expenditure during the first half of 2012, had increased by 4.2 percent year on year to incur a bill of US $ 9.66 billion from US $ 9.28 billion spent during the same period of last year.

The country has recorded a trade deficit of US $ 4.70 billion during the first six months of this year, widening by 11.6 percent year on year. However, with the dropping of imports, budget deficits was getting narrow down during this year, he said.

Sri Lanka has earned US $ 2.94 billion via worker remittances during the 1st half of this year; an increase of 17.4 percent, while the country’s Foreign Direct Investments too has gone up by 14.6 percent to record a sum of US $ 451 million.

Commercial Banks have borrowed US $ 927 million via overseas sources during the reference period, while Earnings from tourism during the specified period stands at US $ 459.9 million. The government has got US $ 2.27 billion worth inflows during the first half of this year, an increase of 50.8 percent year-on-year.

The removal of export taxes and subsidized water and electricity for the industrial sector, has benefitted the country immensely, which was a striking feature of the government’s fiscal policy, he added.