Oil prices fuel Sri Lanka’s trade gap

Feb. 10 (LBO) – Sri Lanka's trade deficit widened by 12 percent to US$ 2.5 billion for the year ended 2005, though foreign remittances helped strengthen the island's balance of payments, the Central Bank said Friday. The country's trade balance reported a US$ 502 million surplus as at end 2005, helped by a 26 percent growth in private remittances, the bank said.

"â€¦the benefit of debt moratorium and the Central Bank's purchase of the net proceeds of foreign currency loans mobilised by the government," also contributed to the surplus, the statement said.

Last December, Citigroup helped the government raised US$ 100 million through a three-year syndicated loan, priced at 95 basis points above the London Interbank offered rate or LIBOR.

Higher dollar inflow also boosted the island's gross official reserves to US$ 2.7 billion last year, over US$ 2.2 billion reported in Dec. 2004.

However, the island's trade gap widened, despite a 10 percent growth in export earnings last year.

Higher earnings the sale of apparels, textiles, rubber-based products, food and beverages netted in US$ 6.3 billion last year.

The gains were however, negated by a US$ 1.7 billion (up 37 percent growth) petroleu