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Sri Lanka’s February trade deficit narrows despite higher petroleum imports

April 11, 2007 (LBO) – Sri Lanka's trade deficit narrowed to 144.5 million dollars in February despite oil import costs moving up, the central bank said Wednesday. The Central Bank said reserves had grown to 2,578 million dollars (2.9 months of imports) by end February with balance of payments surplus of 53 million dollars.

The February deficit was the lowest since December 2005, the central bank said.

Imports

Petroleum imports rose by 1.8 per cent in February 2007, but intermediate (-4.8%) and investment goods fell (-13.6), with the trade deficit narrowing by 31.3 percent to 144.5 million dollars.

Total imports slipped 1.7 per cent to 735 million US dollars against 748 million US dollars in 2006.

Some analysts say that the economy may be responding to central bank's tight monetary policy, though February could be a one-off.

Consumer goods imports however rose with he government cutting import duties on a number of essential items in December, which were originally due to be lifted in February, but have since been continued.

For the first two months of the year the deficit was down to 443 million dollars from 450 mi

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