The external sector remained relatively stable in May 2019 supported by a contracting trade deficit. 

In May 2019, the deficit in the trade account narrowed to US dollars 823 million from US dollars 933 million in May 2018.

The considerable reduction in the trade deficit in May 2019 was due to the decline in import expenditure by 3.9 per cent (year-on-year) and an increase of export earnings by 4.0 per cent (year-on-year). 

Earnings from tourism in May recorded a decline of 70.8 per cent (year-on-year), reflecting the impact of Easter Sunday attacks. However, tourist arrivals in June are expected to have recovered with almost a doubling of the number of arrivals in comparison to May 2019. 

Workers’ remittances amounted to US dollars 562 million in May 2019, recording a decline of 3.1 per cent (year-on-year). On a cumulative basis, workers’ remittances amounted to US dollars 2,733 million during the first five months of 2019.

The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 11 July 2019, decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank at their current levels of 7.50 per cent and 8.50 per cent, respectively. The Board arrived at this decision following a careful analysis of current and expected developments in the domestic economy and the financial market as well as the global economy. The decision of the Monetary Board is consistent with the aim of maintaining inflation in the desired 4-6 per cent range while supporting economic growth to reach its potential over the medium term.