Sri Lanka’s trade deficit expands 52.4%; worker remittances top US$1.5bn

October 11, 2006 (LBO) – Sri Lanka’s trade deficit expanded 52.4 percent to 2,400 million dollars for the eight months to August, compared with the same period 2005, the central bank said Wednesday, as the island spent more to import fuel. Sri Lanka’s 24 billion dollar economy is forecasted to expand by 7.0 percent by end-2006, the bank said earlier, but growth would remain vulnerable, as sporadic attacks on military positions by Tamil Tiger rebels have left over 950 people dead since last December. From January-August, the island’s import bill rose 21.1 percent to 6,811 million dollars over the corresponding period 2005, while exports rose 8.9 percent to 4,411 million dollars.

A net oil importer, Sri Lanka’s fuel bill rose 46.2 percent to 1,456.3 million dollars, over the same period last year – as world crude prices soared over 60 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 26.2 per cent to 994 million dollars in August 2006 led by consumer, intermediate and investment goods,” the bank said. “Growth