Sri Lanka’s external current account returned to a surplus of US$ 133 million in August, ending four consecutive months of deficits, according to the Central Bank’s External Sector Performance report for August, published on Wednesday.

The Bank attributed the swing to a lower trade deficit than in recent months, reflecting reduced import expenditure. The return to surplus had been flagged in the monetary policy review a day earlier, which gave the direction but not the figure.

The surplus is well below the $376 million recorded in August 2025.

The year tells a different story

Across January to August the current account ran a cumulative deficit of $291 million, against a surplus of $2 billion in the same period of 2025. The Central Bank attributes the deterioration to external-sector pressure stemming from the escalation of the Middle East conflict.

The merchandise trade deficit widened year-on-year to $674 million in August from $414 million, on higher imports and weaker exports. Cumulatively it has expanded about 68% to $7.2 billion, from $4.3 billion a year earlier, the Daily FT reported.

Merchandise imports rose 12.8% year-on-year to $1.9 billion in August, with the cumulative bill up 24.1% to $16.6 billion. Total exports of goods and services fell 2.7% to $1.8 billion in the month, though cumulative exports edged up 1.5% to $14.1 billion.

Fuel, vehicles and the terms of trade

Monthly fuel import spending fell for a fourth consecutive month in August — but the cumulative fuel bill still stands at roughly $4.0 billion, up 61.6% year-on-year, which is the single clearest measure of the energy shock running through the external accounts.

Spending on motor vehicle imports, personal and commercial, was $189 million in August, down 24.2% from a year earlier, with $1,684 million spent over the eight months. A temporary 50% surcharge on vehicle import duty has been in force since May and runs to the end of December.

The terms of trade deteriorated year-on-year, as import prices rose faster than export prices.

Services, tourism and remittances

The services account posted a $220 million surplus in August, a 24.4% reduction on a year earlier, with the cumulative surplus down 21.4% to $2.1 billion.

Tourist arrivals fell 3.3% year-on-year in August and are down 2.0% over the eight months. Tourism earnings were an estimated $264 million in the month — up 2.1% — but cumulative earnings have fallen 10.0% to $2.1 billion.

Workers’ remittances rose 10.0% year-on-year to $749 million in August, taking the eight-month total up 19.8% to $6.1 billion, and remain the strongest-performing line in the external accounts.

Reserves and the rupee

Foreign investment in government securities recorded a net inflow of $70.2 million in August, while foreign investment in the Colombo Stock Exchange recorded a net outflow of $58.1 million.

Gross official reserves, including the swap facility with the People’s Bank of China, rose to $6.9 billion by end-August, supported by Central Bank foreign exchange purchases. By end-September the rupee had depreciated 6.3% against the US dollar year-to-date.