Sri Lanka Exceeds Imports with $542mn in Foreign Exchange Earnings in April
Sunday June 2, 2024 10:04 am
In a surprising turn of events, Sri Lanka’s foreign exchange earnings from merchandise exports, remittances, tourism, and other services surpassed imports by a whopping $542 million in April 2024, according to official data.
The country’s hard goods exports saw a significant boost, reaching $877.6 million in April, up from $848.6 million in the same period last year, despite it being a holiday month which typically experiences a 20 percent downturn.
Remittances also showed a remarkable increase, totaling $543.8 million, compared to $454 million in the previous year. Meanwhile, tourism income for April was estimated at $225.7 million, though the data source is a survey and may not be as reliable as customs or remittances data.
When considering gross services, including tourism, the total foreign exchange earned by Sri Lankans from exports, remittances, and services amounted to $1,977 million in April 2024.
On the other hand, merchandise imports stood at $1,435 million, resulting in a surplus of $542 million. The central bank of Sri Lanka has begun providing more comprehensive service data in 2024 to offer a broader perspective beyond the merchandise trade account.
Despite the positive figures, there remains a prevalent belief in Sri Lanka regarding the trade deficit. Macro economists often cite the ‘current account deficit’ as a reason for monetary instability, following the printing of money to enforce rate cuts, drawing inspiration from mercantilist doctrine dating back to the 17th century.
While some argue in favor of the trade deficit, others challenge the notion, pointing to historical evidence and economic principles that suggest otherwise. The central bank’s approach to managing foreign exchange earnings and spending has been inclusive of all sectors, whether hard goods or services.
Looking ahead, the government’s ability to maintain a balance between foreign earnings and spending will be crucial, especially as private credit recovers and infrastructure projects resume. With strategic measures in place, Sri Lanka aims to navigate the complexities of international trade while ensuring economic stability and growth.