Sri Lanka’s external current account flipped to a deficit in April 2026, reversing the surplus run posted from January through March, the Central Bank said in its monthly external sector update released on Saturday.
The reversal was “mainly driven by the widened trade deficit, a moderation in the services surplus, and higher primary income account deficit, despite an increase in workers’ remittances compared to a year earlier,” the central bank said in remarks reported by EconomyNext. The merchandise trade deficit widened to $3.7 billion during January-April, against $2.3 billion in the same period of 2025.
Spending on fuel imports skyrocketed to $886 million in April alone, the worst single month since the 2022 default era, on the back of Middle East conflict-driven freight and insurance premiums. Motor vehicle imports added $208 million in April, taking the four-month tally to $821 million as the post-restriction import wave continued. Terms of trade deteriorated year-on-year as import prices rose faster than export prices.
The services account also weakened. The April surplus fell 37.8% year-on-year to $229 million, with the four-month cumulative surplus down 24.3%. Tourist arrivals dropped for a second consecutive month to 135,643 in April, a 22.3% year-on-year contraction the central bank attributed to “the conflict in West Asia.” Tourist earnings were $157 million in April, down 38.8% year-on-year, with cumulative four-month earnings of $1,111 million 19.4% below the same period of 2025.
Workers’ remittances were the one bright spot. Inflows reached $768 million in April and $3,063 million for January-April, up 24.5% year-on-year. Foreign investment in government securities posted a net inflow of $2 million in April; the Colombo Stock Exchange recorded a $16 million net outflow.
Gross official reserves, including the swap with the People’s Bank of China, stood at around $6.8 billion at end-April amid external debt service payments and net foreign exchange sales by the Central Bank. The rupee has depreciated 5.4% against the US dollar year-to-date as of end-May.
