Sri Lanka's trade deficit narrowed amid ongoing import restrictions in the month of August, according to an external sector performance report published by the Central Bank of Sri Lanka (CBSL) late Friday. Sri Lanka's trade deficit narrowed to 342 million U.S. dollars as imports declined more than exports in the month of August. Imports of fuel have declined by 885.6 million U.S. dollars from January to August while imports of personal vehicles have declined 215.6 million dollars amid restrictions.
Remittances from migrant workers, Sri Lanka's largest foreign exchange earner, rose a substantial 28 percent year-on-year to 663 million U.S. dollars. Remittances have risen for three consecutive months after an initial dip in March, April, and May amid global lockdowns. Merchandise exports declined 8.3 percent year-on-year to 947 million U.S. dollars but continued to rebound from the initial pandemic-induced shocks. "The export performance remained strong for the third consecutive month in spite of the pandemic affected global demand," the CBSL statement said. Meanwhile, foreign exchange earnings from tourism continued to be nil as a border closure initiated by the government in March amid the COVID-19 pandemic continued to be in effect. Sri Lanka's gross official reserves stand at 7.4 billion U.S. dollars, while total foreign assets including the banking sector stand at 10.3 billion U.S. dollars, as of the end of August. "The Sri Lankan rupee, which demonstrated some volatility in mid-August, stabilized towards the end of the month," the CBSL said.