Sri Lanka recorded nearly a billion-dollar deficit in the trade account of the balance of payment in the month of February 2022, as the imports continued to run stronger while merchandise exports recorded its eighth consecutive month of over a billion-dollar earnings,the Central Bank announced.
The cumulative deficit in the trade account during January to February 2022 widened to US dollars 1,640 million from US dollars 1,227 million recorded over the same period in 2021.
The ratio of the price of exports to the price of imports, deteriorated by 10.7 per cent in February 2022, compared to February 2021, as the increase in import prices surpassed the increase in export prices.forces beyond the expected level of depreciation in the measured adjustment.
The deficit in the trade account widened to US dollars 781 million in February 2022, compared to the deficit of US dollars 572 million recorded in February 2021.
However, on a monthon-month basis, the trade deficit declined in February 2022 from US dollars 859 million recorded in January 2022.
Earnings from merchandise exports in February 2022 grew by 14.7 per cent over February 2021, recording at US dollars 1,092 million.
An increase in earnings was observed in industrial exports and mineral exports, while a decrease was observed in agricultural exports.
The cumulative export earnings, which increased by 16.1 per cent during January-February 2022 over the same period of the last year, amounted to US dollars 2,192 million
Overall imports: Expenditure on merchandise imports increased by 22.9 per cent to US dollars 1,873 million in February 2022, compared to US dollars 1,524 million recorded in February 2021, while recording a decline, compared to December 2021 and January 2022.
An increase in expenditure was observed across all main categories, with intermediate goods imports contributing mainly to the expansion.
On a cumulative basis, total import expenditure amounted to US dollars 3,832 million during the period from January to February 2022, recording an increase of 23.0 per cent, compared to US dollars 3,115 million recorded in the corresponding period in 2021.
. Tourist arrivals showed a notable recovery in February 2022 over the same month in the previous year. Workers’ remittances continued to moderate in February 2022. Foreign investment in the Colombo Stock Exchange (CSE) recorded a net inflow during the month.
The weighted average spot exchange rate in the interbank market hovered around Rs. 202 per US dollar during February 2022.
However, the Central Bank allowed a measured adjustment in the exchange rate in the first week of March 2022, in view of the heightened pressures on the exchange rate amidst subdued liquidity in the domestic foreign exchange market, resulting in an overshoot subsequently by market Trade Balance.