Central bank of Sri Lanka has disclosed in a statement that the trade deficit has widened substantially to US$743 million in February 2017 from a year ago with a decline in exports amid increased imports mainly of fuel and rice. Exports fell 2.7% in February to $867.8 million while imports rose 11.9% to $1.61 billion. Sri Lanka’s January-February 2017 trade deficit widened to $1.68 billion from $1.24 billion the year before. The drought in the recent past and floods now has destroyed Sri Lankan rice cultivation in big way and therefore higher Rice imports played a significant part in widened trade deficit. Rice imports increased to $36 million in February 2017 in comparison to less than a million US dollars incurred in February 2016.
The Indian government, among many other countries had provided an emergency assistance of water and rice to Sri Lanka, which had one of the worst droughts in the last four decades, with more than a million people experiencing acute water and food shortages. India had dispatched 100 metric tonnes of rice to Sri Lanka earlier with more to follow, courtesy External Affairs Minister Sushma Swaraj who had assured of all the help to its neighbour it needed. Food, beverages and tobacco and gems, diamonds and jewellery also contributed substantially to the lower earnings from industrial exports. Moreover, earnings from coconuts, minor agricultural products and vegetables exports declined in February 2017. Higher international oil prices and depreciation of the rupee also contributed to the increase in import expenditure on fuel. However, earnings from machinery and mechanical appliances, petroleum products and rubber products improved, the central bank said.