Sri Lanka’s Jan-June trade deficit widens sharply on oil

August 4, 2006 (LBO) – Sri Lanka's trade deficit expanded 48.0 percent to 1,793 million dollars for the six months to June, compared with the same period 2005, the central bank said Friday, as the island spent more to import fuel. From January-June, the island imported 4,955 million dollars worth of goods, up 20.3 percent over the corresponding period, while exports rose 8.8 percent to 3,162 million dollars.

A net oil importer, Sri Lanka spent 1,039 million dollars – a rise of 41.0 percent over the same period last year – as world crude prices soared over 75 dollars a barrel.

Petroleum accounts for 21.0 percent of the country's total import bill. Bulk of the fuel purchases are used to run expensive diesel generators to make up the shortfall in hydro power plants, which get hit during cyclical droughts.

"Imports grew by 15.3 per cent to 940 million dollars in June 2006 reflecting increases in intermediate and investment goods," the bank said. "The growth of the intermediate good imports was led mainly by petroleum products, while investment good imports were driven by transport, machinery equipment and building materials."

The country's balance of payments, recorded a 146 million dollar surplus for the si