External sector performance summary July 2026

The external current account recorded a deficit of US$142 million in July 2026, remaining in the deficit for the fourth consecutive month reflecting the impact of developments in the Middle East. Consequently, the cumulative current account recorded a deficit of US$ 387 million during January-July 2026, compared to a surplus during the corresponding period of 2025.

The merchandise trade deficit widened on a year-on-year basis in July 2026, driven by higher import expenditure and lower export earnings. Accordingly, the cumulative trade deficit widened to US$ 6.5 billion during January–July 2026, compared to US$ 3.9 billion in the corresponding period of 2025.

Monthly fuel import expenditure declined marginally from US$ 465 million in June 2026 to US$ 453 million in July 2026. However, expenditure on fuel imports increased by 68.0% (year-on-year) in July 2026, mainly driven by higher expenditure on crude oil imports. Cumulative fuel import expenditure amounted to approximately US$ 3,622 million during January–July 2026, recording a 59.9% (year-on-year) increase compared to the corresponding period of 2025.

Expenditure on motor vehicle imports, including both personal and commercial vehicles, amounted to US$ 241 million in July 2026. Meanwhile, cumulative expenditure on motor vehicle imports amounted to US$ 1,495 million during January–July 2026.

The terms of trade deteriorated on a year-on-year basis in July 2026, as import prices increased at a faster pace than export prices. Similarly, the terms of trade deteriorated during January–July 2026 compared to the corresponding period of 2025.

The services account recorded a surplus of US$ 244 million in July 2026, representing a year-on-year decline of 23.0%. However, the surplus increased by 50.7% compared with the previous month, mainly driven by higher tourism earnings. Reflecting the year-on-year continuous moderation in the monthly services account surplus, the cumulative services account surplus decreased by 22.4% to US$ 1.8 billion during January-July 2026.

Tourist arrivals declined marginally by 1.7% year-on-year in July 2026. Total arrivals during January-July 2026 amounted to 1,343,418, compared to 1,368,288 arrivals recorded during the corresponding period of 2025. Meanwhile, tourism earnings were estimated at US$ 286 million in July 2026, reflecting a 10.3% decline from a year earlier, while recording an 88.9% increase on a month-on-month basis. Cumulative tourism earnings during January-July 2026 declined by 11.5% to US$ 1.8 billion, compared to the corresponding period of 2025.

Workers’ remittances increased by 11.5% year-on-year to US$ 778 million in July 2026. Consequently, cumulative remittances during the first seven months of 2026 rose by 21.4% on year-on-year basis to US$ 5.4 billion.

Foreign investment in the government securities market recorded a notable net inflow of US$ 159.4 million, while foreign investment in the Colombo Stock Exchange (CSE), including both primary and secondary market transactions, recorded a marginal net outflow of US$ 6.3 million during the month of July 2026.

Gross official reserves (GOR), including the swap facility with the People’s Bank of China (PBOC), were recorded at US$ 6.6 billion by end July 2026, supported by foreign exchange purchases by the Central Bank.

By end August 2026, the Sri Lanka rupee depreciated by 5.5% against the US dollar on a year-to-date basis. Despite the overall depreciation, the Sri Lanka rupee appreciated somewhat in recent weeks, reflecting the impact of recently implemented monetary, fiscal and macroprudential policy measures.

The Sri Lanka Tourism Development Authority has revised the methodology of compiling monthly earnings from tourism estimates in May 2026 to enhance the accuracy and representativeness of such estimates incorporating country-specific data on tourist arrivals, average daily expenditure, and average duration of stay. The revised methodology has been applied retrospectively to monthly estimates from January 2026 onwards. Accordingly, monthly estimates on earnings from tourism for January – April 2026 have been revised.

Includes primary and secondary market transactions

Includes valuation changes that impact reserve asset position (CBSL)