Surging oil prices a few months back saw July record the highest monthly average price for imported crude oil at US$134.34 per barrel against $71.25 in July 2007, the Central Bank said but it was unclear from the statement as to what comparative period the record represented.“Earnings from exports surged by 24.1 % in July 2008, reaching the highest ever recorded value of US$849 million, following the marginal decline witnessed in June 2008,” the Bank said.

Agricultural exports grew by 54.7 %, bolstered by a 70 % share of tea, as a result of both improved prices and higher volumes. Prices of tea, which have been on an increasing trend from early 2007, increased further, pushing the average price of tea to US$ 4.17 per kg in July 2008. Minor agricultural exports also grew at a faster pace relative to other agricultural exports supported by strong performance of vegetables, fruits, cloves, cinnamon and unmanufactured tobacco. Apparel exports which suffered in June 2008 showed a turnaround in July 2008 recording a growth of 17.6 cent. Expenditure on imports increased by 52 %, year-on-year, to US$1,262 million in July 2008. Substantial increase in oil prices raised the imports of petroleum, fertilizer and chemical products in July 2008.

The trade deficit reached US$414 million in July 2008 compared to the deficit of US$146 million in July 2007. For the first seven months of 2008, the deficit in the trade balance amounted to US$ 3,530 million, compared to the deficit of US$1,882 million for the corresponding period last year. However, private remittances during the period January-July 2008, which amounted to US$ 1,710 million, and the higher capital and financial flows did more than offset the deficit in the current account, as a result of which, the overall balance of payments recorded a surplus of US$516 million by end-July 2008. Consequently, the gross official reserves increased to US$3,557 million by end July 2008, up from US$3,063 million in December 2007, sufficient to finance around 3.2 months of imports, the Bank statement said.