Sri Lanka’s expenditure on fuel imports increased by 112% year-on-year to US$536 million in May 2026, driven by higher global oil prices and increased import volumes, according to the Central Bank of Sri Lanka (CBSL).
However, on a month-on-month basis, fuel import expenditure declined by 39.5% in May.
In its External Sector Performance Report for May 2026, the CBSL said the ongoing conflict in the Middle East continued to affect Sri Lanka’s external sector, with the country recording a current account deficit for the second consecutive month.
The external current account posted a deficit of US$194 million in May, mainly due to a wider trade deficit and a moderation in the services surplus, despite higher workers’ remittances compared to a year earlier. The cumulative current account deficit for January to May 2026 stood at US$97 million.
The merchandise trade deficit widened as import expenditure grew faster than export earnings. As a result, the cumulative trade deficit increased to US$4.7 billion during the first five months of 2026, up from US$2.7 billion during the same period in 2025.
Meanwhile, expenditure on motor vehicle imports, including personal and commercial vehicles, rose by 20% month-on-month to US$250 million in May. Total spending on vehicle imports reached US$1.07 billion during January–May 2026.
The CBSL also noted a deterioration in the country’s terms of trade, as import prices increased at a faster pace than export prices, both in May and over the first five months of the year.
The services account surplus declined by 36.8% year-on-year to US$143 million in May, reflecting faster growth in services-related outflows than inflows. The cumulative services surplus also contracted by 20.8% compared to the corresponding period last year.
Tourist arrivals increased by 9.6% year-on-year in May, with total arrivals exceeding one million during the first five months of 2026. However, tourism earnings fell by 5.1% to US$156 million in May, while cumulative earnings declined by 11.9% to US$1.36 billion.
Workers’ remittances remained a key source of foreign exchange, rising to US$847 million in May. Total remittances for January to May increased by 26% year-on-year to US$3.9 billion.
Foreign investment flows remained negative during the month, with net outflows of US$60 million from the government securities market and US$23 million from the Colombo Stock Exchange.
Sri Lanka’s gross official reserves stood at US$6.9 billion at the end of May 2026, supported by the receipt of the sixth and seventh tranches under the IMF’s Extended Fund Facility, despite external debt servicing and foreign exchange sales by the Central Bank.
The Sri Lankan rupee depreciated by 7.9% against the US dollar during the first half of 2026, with the CBSL attributing the decline to external pressures stemming from the Middle East conflict, in line with trends observed in other regional economies.