Current account dips back into deficit in Sept.

• $ 128 m deficit follows Aug. surplus but narrows from $ 194 m a year earlier

The external current account slipped back into a deficit of $ 128 million in September after recording a surplus in August, taking the cumulative deficit for the first nine months to $ 420 million.

“The deficit was lower than in September 2025, as the lower trade deficit and higher inflows of workers’ remittances outweighed the higher primary income deficit and the lower surplus in the services account,” the Central Bank of Sri Lanka (CBSL) said in its External Sector Performance report for September, released on Friday.

The current account deficit stood at $ 194 million in September 2025. The January-September deficit compares with a surplus of $ 1.9 billion in the corresponding period of 2025.

The merchandise trade deficit narrowed to $ 731 million in September from $ 910 million a year earlier, as the increase in export earnings exceeded a 2.9% year-on-year (YoY) rise in import expenditure to $ 2.1 billion. The cumulative trade deficit, however, widened by about 53% to $ 7.9 billion during the first nine months from $ 5.2 billion a year earlier, as the import bill rose 21.3% to $ 18.7 billion.

“Monthly expenditure on fuel imports declined for the fifth consecutive month (month-on-month) in September 2026. However, cumulative fuel import expenditure increased by 51.5% (year-on-year) to approximately $ 4.5 billion during January-September 2026,” the CBSL said.

The terms of trade, the ratio of export prices to import prices, deteriorated YoY in September and during January-September, as import prices rose faster than export prices.

The services account surplus declined 34.3% YoY to $ 119 million in September, as outflows rose 36.7% to $ 441 million. Spending on travel abroad increased 64.9% to $ 122 million, while payments for sea and air transport services rose 49.3% to $ 140 million. Services outflows increased 24.7% to $ 3 billion during January-September, with travel abroad up 62.4% to $ 937 million and sea and air transport payments up 23.8% to $ 940 million.

“With the continued moderation in the monthly services account surplus, the cumulative services account surplus declined by 22.3% to $ 2.2 billion during January-September 2026 on a year-on-year basis,” the CBSL said.

The primary income account, which mainly captures investment income such as dividends and interest flowing in and out of the country, recorded a deficit of $ 241 million in September, against $ 152 million a year earlier. Primary income outflows rose 44.2% to $ 290 million, driven mainly by payments on direct investment, which more than doubled, rising 120.9% to $ 192 million. Interest payments on other investment fell 26.2% to $ 50 million. Over the nine months, primary income outflows declined 2.2% to $ 1.95 billion, keeping the cumulative deficit at $ 1.48 billion, below the $ 1.54 billion recorded a year earlier.

Personal transfer outflows rose 29.1% YoY to $ 10 million in September and 12.7% to $ 110 million during January-September.

On the inflow side, merchandise exports rose 21% YoY to an all-time monthly high of $ 1,377 million in September, surpassing the previous peak of $ 1,302 million in July 2025, and increased 5.3% to $ 10.8 billion during January-September. Services inflows rose 11.2% in September but slipped 0.6% to $ 5.3 billion in the nine months. Tourism earnings, estimated under a revised Sri Lanka Tourism Development Authority methodology, rose 1.5% to $ 186 million in September but fell 9.2% to $ 2.2 billion cumulatively. Workers’ remittances increased 5.6% to $ 734 million in September and 18.1% to $ 6.9 billion during January-September, a figure the CBSL said may include other remittances, such as those received following Cyclone Ditwah.