The trade deficit widened in February 2020 compared to February 2019, as expenditure on imports increased at a faster pace than the increase in earnings from exports. The tourism industry, which recovered faster than expected in the aftermath of the Easter Sunday attacks, was affected again with the outbreak of COVID-19 evolving as a pandemic from late February 2020. Workers’ remittances recorded a year on year growth, while foreign investment in the government securities market and the Colombo Stock Exchange (CSE) recorded net outflows in February 2020. The Sri Lankan rupee, which remained relatively stable up to the second week of March 2020, depreciated significantly in the latter part of March up to mid-April 2020, but started to stabilise thereafter, and recorded a significant appreciation in the first week of May 2020. Significant implications on the external sector performance are expected from the COVID-19 pandemic from March 2020 onwards, particularly in the areas of merchandise trade, tourism, workers’ remittances and foreign investment.

The European Commission has de-listed Sri Lanka from its list of High Risk Third Countries with Anti- Money Laundering and Countering the Financing of Terrorism Strategic Deficiencies published on May 07, 2020.