The external current account recorded a marginal surplus in March 2026, mainly supported by higher workers’ remittances and a lower primary income deficit, despite a widening of the trade deficit and a moderation in the services surplus compared to a year earlier. The cumulative current account surplus reached US$ 531 million during the first quarter of 2026.
The merchandise trade deficit widened in March 2026, reflecting stronger growth in imports relative to exports. In the first quarter of 2026, the merchandise trade deficit widened to US$ 2.3 billion, compared to US$ 1.5 billion in the corresponding period of 2025.
Expenditure on fuel imports increased notably by 74.7% on a year-on-year basis to US$ 630 million in March 2026, due to the surge in fuel prices and volumes caused by the ongoing war in the Middle East.
Vehicle imports, including both personal and commercial vehicles, amounted to US$ 195 million in March 2026, bringing total vehicle imports to US$ 613 million during the first quarter of 2026.
The terms of trade deteriorated on a year-on-year basis in March 2026, as the decline in export prices exceeded the decline in import prices. Meanwhile, the terms of trade marginally deteriorated in the first quarter of 2026 compared to the corresponding period of the previous year.
The surplus in the services account declined sharply by 42.4% to US$ 227 million in March 2026 on a year-on-year basis, mainly due to the reduction in tourist earnings. The cumulative surplus also contracted by 20.2% during the first quarter of 2026 compared to the corresponding period of 2025.
Tourist arrivals in March 2026 declined to 183,979, reflecting a sharp contraction of 19.8% on a year-on-year basis, reversing the steady growth momentum observed in recent months, due to the impact of the war in Middle East. Tourist earnings were estimated at US$ 224 million in March 2026, while cumulative earnings declined by 15.0% on year-on-year basis to US$ 954 million in the first quarter of 2026.
In March 2026, workers’ remittances increased to US$ 815 million, recording a year-on-year growth of 17.5%. Cumulatively, remittances during the first quarter of the year recorded a notable growth of 26.5% on a year-on-year basis.
Foreign investments in the government securities market recorded a net outflow of US$ 64 million, while foreign investments in the Colombo Stock Exchange (CSE), including both primary and secondary market transactions, recorded a net outflow of US$ 10 million during the month of March 2026.
Gross official reserves (GOR), including the swap facility with the People’s Bank of China (PBOC), was US$ 7.0 billion at end March 2026. The decline in GOR during the month was mainly due to external debt service payments, despite net foreign exchange purchases by the Central Bank.
As of end April 2026, the Sri Lanka rupee had depreciated by 2.9% against the US dollar on a year-to-date basis, amid external sector pressures following the onset of the Middle East conflict in late February 2026.