FINANCIAL CHRONICLE – The import expenditure in February 2026 experienced a significant increase, primarily driven by higher costs associated with fuel and vehicle imports, leading to an expanded trade deficit, according to data from the Central Bank.
In February, the value of merchandise imports surged by 25.2 percent, reaching US$1.83 billion, compared to US$1.46 billion in the same month the previous year. The spending on personal and commercial vehicles skyrocketed to US$193.6 million from just US$9.7 million a year earlier. Additionally, expenditure on fuel imports rose by 43 percent, climbing to US$398 million from US$278.4 million during the same period last year.
On the export side, total merchandise exports saw a slight increase of 0.5 percent, amounting to US$1.06 billion, which resulted in a trade deficit of US$776.1 million. Although the country maintained a current account surplus for the fourth consecutive month in February, analysts caution that the growing trade deficit and rising import levels pose risks to long-term economic stability.
Remittances and foreign exchange earnings from tourism played a vital role in mitigating the trade deficit, contributing to the current account surplus. Together, these sources brought in US$1.08 billion to Sri Lanka in February.
For the first two months of 2026, the merchandise trade deficit expanded to US$1.4 billion, up from US$1.1 billion in the same period of 2025. However, the surplus in the services account decreased by 16.7 percent year-on-year in February 2026, indicating a decline in inflows from key service sectors, particularly tourism, alongside increased outflows related to international travel.
In terms of foreign investments, the government securities market saw a net inflow of US$53 million. Conversely, foreign investments in the Colombo Stock Exchange (CSE) experienced a net outflow of US$30 million in February 2026.
Experts warn that potential disruptions to remittance flows due to tensions in the Middle East, coupled with the ongoing rise in imports of vehicles and luxury items outpacing export growth, could lead to the current surplus diminishing by the end of this year. (Colombo/April 01/2026)
