Sri Lanka’s fragile external sector took a noticeable hit in April 2025, as the current account balance narrowed sharply while the trade deficit expanded substantially. According to data released by the Central Bank, the current account surplus dropped from $459 million in March to just $178 million in April—reflecting a steep $281 million decline within a month.
The primary driver behind this downturn is a mismatch in external trade performance. While merchandise exports grew by 10.4% year-on-year, imports surged ahead at 17.5% over the same period. A key factor cited by the Central Bank is the easing of vehicle import restrictions, which alone accounted for $134 million in import growth for April.
As a result, Sri Lanka’s trade deficit widened significantly from $396 million in March to $717 million in April—a $321 million increase. The trade gap was further exacerbated by a slump in exports, which fell from $1.24 billion in March to $968 million in April, signaling a worrying slowdown in foreign revenue generation.
Adding to the strain, worker remittances also dipped, falling from $693 million in March to $646 million in April, putting additional pressure on the country’s external inflows.
Meanwhile, gross official reserves, which stood at $6.5 billion at the end of March, saw a marginal decline to $6.3 billion by the end of April.
These figures come at a time when Sri Lanka is seeking to stabilize its external position and meet International Monetary Fund (IMF) targets amid a fragile economic recovery. The Central Bank is expected to closely monitor trade and remittance trends over the coming months as the island nation navigates a delicate path between recovery and risk.
