The deficit in the trade account widened on a year-on-year basis for the third consecutive month in May 2021. Both exports and imports were significantly higher in May 2021 than in May 2020, mainly due to the statistical effect of pandemic related disruptions a year ago. Earnings from exports increased, while imports declined in May 2021 compared to the previous month. During the month, workers’ remittances continued to increase, while earnings from tourism remained at minimal levels. In the financial account, foreign investment in the government securities market and the Colombo Stock Exchange (CSE) recorded marginal net outflows in May 2021. Meanwhile, the Sri Lankan rupee remained broadly stable throughout the month, and gross official reserves stood at US dollars 4.0 billion by end May 2021.

In terms of the provisions of the Foreign Exchange Act, No. 12 of 2017, the Hon. Minister of Finance has issued Regulations, with the approval of the Cabinet of Ministers, to permit companies incorporated in Sri Lanka under the Companies Act, No. 7 of 2007 (excluding companies engaged in finance business as per the Finance Business Act, No. 42 of 2011) to purchase International Sovereign Bonds issued by the Government of Sri Lanka (ISBs), in the secondary market.

According to the above Regulations, companies can invest in ISBs utilizing 50% of the foreign currency borrowed from a person resident outside Sri Lanka in terms of the prevailing Foreign Exchange Regulations and subject to the following terms and conditions.