According to Central Bank data released on Sunday, Sri Lanka’s usable foreign reserves are continuing to fall sharply, with less than US$500 million recorded in June 2022 – barely enough for a month’s imports.
While gross official reserves stood at $1.9 billion at the end of June 2022, this included a swap facility from the People’s Bank of China worth around $1.5 billion that is subject to usability conditions. “By the end of June 2022, the level of usable reserves will remain significantly low,” the Central Bank said in a statement.
The merchandise trade balance, on the other hand, recorded a surplus in June 2022 for the first time since August 2002, owing to historically high monthly export earnings and a continued decline in import expenditure.
Despite the negative sentiments associated with travel advisories and the ongoing fuel shortage and resulting transportation difficulties, tourism earnings increased (year on year) in June 2022 from a low base. Remittances from workers moderated in June 2022 compared to May 2022, reflecting an increase in grey (unofficial) market activity for foreign exchange transactions.
According to the statement, the merchandise trade account balance in June 2022 recorded a surplus of $21 million, compared to a deficit of $652 million in June 2021, and for the first time since August 2002, when a trade surplus of $110 million was recorded.
The cumulative trade deficit fell to $3,514 million in January-June 2022, down from $4,316 million in the same period in 2021.
Earnings from merchandise exports increased by 23.9 percent in June 2022 compared to the same month in 2021, reaching $1,248 million, the highest monthly export earnings ever recorded. Cumulative export earnings from January to June 2022 increased 14.3% over the same period last year, totaling $6,514 million.
Workers’ remittances fell to $274 million in June 2022, down from $304 million the previous month and $478 million in the same month the previous year. Total departures for foreign employment were recorded at 26,944 in June 2022, a significant increase from 22,194 in May 2022.
Total departures for foreign employment during January-June 2022 were 140,701, up from 30,757 in the same period the previous year and 117,952 in 2021.
Tourist arrivals increased to 32,856 in June 2022, up from 30,207 in May 2022. Tourism earnings are expected to be $59 million in June 2022, up from $54 million in the previous month and $4 million in the same month the previous year.