Worker remittances rescue Lanka’s forex position once again

The negative impact of Sri Lanka’s trade deficit on the current account was mitigated by worker remittances, which amounted to US$752 million for the quarter ending March 2008, the Central Bank said this week.

Thus the overall balance of payments recorded a surplus of US$416 million for the period January-March 2008, resulting in the gross official reserves increasing to US dollars 3,518.6 million by end March 2008, which is sufficient to finance around 3.5 months of imports, the Bank said in a statement listing out the trade figures for March.

It said in March 2008, earnings from exports increased by 7.8 percent, year-on-year, to US$680 million while agricultural exports, which grew by 29.1 percent, year-on-year, largely contributed to this growth, with earnings from both tea and minor agricultural products increasing significantly.
Cumulative exports during January-March 2008 amounted to US$1,878 million, having increased by 10.2 percent, year-on-year. Expenditure on imports recorded an increase of 32.5 percent, year-on-year, in March 2008, and amounted to US$1,130 million.

Imports of consumer goods grew by 37.1 percent, year-on-year, with large increases being recorded in respect of several categories of food imports, namely, rice, milk products and wheat. The surge in the price of petroleum, which increased by 70 percent to US$100.6 per barrel, led the expenditure on petroleum to contribute more than half of the growth of imports in March 2008. Imports of investment goods increased by 6.2 percent, year-on-year, in March 2008, primarily driven by an increase in the import of building materials.

The Bank said the deficit in the trade balance widened from US$222 million in March 2007 to US$ 449 million in March 2008.
The cumulative deficit in the trade balance for January-March 2008 was US$1,386 million, compared to US$669 million for the corresponding period last year.