‘Exports back at pre-pandemic levels’

External sector performance – February 2021

The increase in exports to the pre-pandemic levels, the notable increase in workers’ remittances and the relative stability in the domestic foreign exchange market supported Sri Lanka’s external sector in February 2021.

The trade deficit in February 2021 broadly remained unchanged at the level reported a year ago. In the financial account, both foreign investment in the government securities market and the Colombo Stock Exchange (CSE) recorded net outflows in February 2021.

The SAARCFINANCE swap facility of US dollars 400 million obtained from the Reserve Bank of India in July 2020 was repaid in February 2021 upon maturity. Net inflows to the domestic foreign exchange market eased the pressure on the exchange rate during the month and the regulatory measures enabled the Central Bank to absorb foreign exchange on a net basis, to build up gross official reserves.

Trade Balance: The deficit in the trade account in February 2021 amounted to US dollars 572 million and broadly remained unchanged, compared to the deficit recorded in February 2020. Both exports and imports were slightly lower in February 2021, compared to February 2020. Meanwhile, the cumulative deficit in the trade account during January – February 2021 narrowed to US dollars 1,227 million from US dollars 1,304 million recorded over the same period in 2020. Terms of Trade: Terms of trade, i.e., the ratio of the price of exports to the price of imports, deteriorated by 3.5 per cent in February 2021, with lower export prices and higher import prices, compared to February 2020. (CBSL)