Earnings from exports stood at $472 million in January, indicating a marginal decline of 3.9 % from the same month in 2009 which has been attributed to lower industrial exports, despite higher earnings from agricultural exports, the Central Bank (CB) said.

Expenditure on imports increased substantially by 70.1 % to $1,161 million, due to increased expenditure on all major categories, particularly intermediate goods led by petroleum imports. As a result, the trade deficit expanded to $689 million, compared to that of January 2009.

Earnings from agricultural exports increased in January 2010, as a result of sound performance by the tea, rubber and minor agricultural exports. Year-on-year, export volumes of both, tea and rubber rose by 18.5 % and 32.6 %, supported by significant increases in export prices, to $4.32 per kg and $2.79 per kg, respectively, from December 2009. Earnings from minor agricultural exports were propelled by better performance of commodities such as cashew nuts and spices (cinnamon, cloves and nutmeg and mace).

However, the decline in earnings from textile and garments exports, which accounted for 37 % of total exports, weighed down on the overall export performance in January 2010. The decline in textile and garments exports is attributed mainly to the lower export volumes compared to January 2009 amidst lower global demand and higher competition from other countries, the CB said.

The increase in import expenditure was led by petroleum and rice, which contributed 52 % and 7 %, respectively, towards the year-on-year growth in import expenditure. Expenditure on petroleum imports increased due to both, the increased import volumes and the substantially higher prices in the international market. The average price of crude oil imports increased by 87.2 % to $78.08 per barrel in January 2010, from $41.71 per barrel in January 2009. The increased expenditure on rice imports was attributed mainly to the larger volumes of rice imports as the government reduced taxes applicable on rice imports to prevent a potential shortage of rice in the domestic market.

In January 2010, $289.8 million was received from Sri Lankan migrant workers, recording a growth of 12.3 % over January 2009. The gross official reserves, with and without Asian Clearing Union (ACU) funds, were at $5,328 million and $5,135 million, respectively, by end January 2010. Based on the previous 12 month average imports of $ 890 million per month, the gross official reserves, without ACU funds, were equivalent to 5.8 months of imports, the CB added.