Sri Lanka’s gross official reserves (GOR) stood at USD 5 billion by the end of March 2024, recording a notable increase compared to USD 4.4 billion at the end of 2023.

In its report on the External Sector Performance in the month of March, the Central Bank of Sri Lanka (CBSL) attributed the surge in GOR to its substantial net purchases of foreign exchange from the domestic foreign exchange market.

Net intervention in March was USD 715 million (based on trade date) and during the first quarter of 2024, the net purchases have amounted to USD 1.2 billion.

Import coverage of GOR – including the swap facility from the People’s Bank of China equivalent to around USD 1.5 billion – remained above 3 months of imports since December 2023.

The CBSL further states that the deficit in the merchandise trade account narrowed to USD 369 million in March 2024 from USD 412 million recorded in March 2023, primarily due to a higher increase in exports than the increase in imports. However, it widened compared to February 2024 (USD 319 million).

Meanwhile, the cumulative deficit in the trade account from January to March 2024 was higher (USD 1,229 million) than the deficit recorded over the same period in 2023 (USD 896 million).

Earnings from merchandise exports increased by 9.8% to USD 1,139 million in March 2024 compared to USD 1,037 million in March 2023, the CBSL said further, adding that there was an increase in earnings across all major categories of exports, where industrial exports increased the most.

The increase in industrial goods exports in March 2024 (year-on-year) was mainly contributed by petroleum products due to the increase in volumes of bunkering and aviation fuel exports, while textiles and garments exports also recorded a notable improvement.

Expenditure on merchandise imports recorded an increase of 4.0% to USD 1,508 million in March 2024 compared to USD 1,450 million in March 2023. Expenditure across all major import categories increased, although intermediate goods led by fuel imports increased the most.

According to the CBSL, the increase in expenditure on consumer goods imports in March 2024 compared to a year ago was due to an increase in expenditure on food and beverages imports, although there was a decline in non-food consumer goods imports (led by lower medical and pharmaceuticals).

Meanwhile, expenditure on intermediate goods imports increased primarily due to higher fuel imports compared to March 2023. However, expenditure on textiles and textile articles, wheat and fertiliser significantly decreased in March 2024.

Expenditure on investment goods recorded a broad-based increase, driven primarily by higher imports of building materials and machinery and equipment. Meanwhile, expenditure on imports in March 2024 increased significantly compared to February 2024 primarily due to the normalisation of fuel expenditure.

With respect to the tourism sector, the CBSL noted that tourism earnings in March 2024 were estimated at USD 338 million, in comparison to USD 346 million in February 2024 and USD 189 million in March 2023.

Meanwhile, the workers’ remittances amounted to USD 572 million in March 2024, as opposed to USD 568 million in March 2023 and USD 476 million in February 2024.