ECONOMYNEXT – Sri Lanka’s imports hit 2,156 million US dollars in October 2025, up from 2,048 million US dollars in September, with strong credit growth driving investment goods and vehicle purchases.
Gross dollar inflows made up of gross exports of 1,149 million, remittances of 712 million and gross services including tourism of 495 million dollars were 2,357 million US dollars, 200 million higher than imports of 2,157 million US dollars.
The trade balance topped a billion US dollars to 1,007 million dollars.
Other than hard goods exports, Sri Lankan citizens earn remittances and other services such as tourism estimated at 186 million US dollars, which allows people to make imports greater than hard goods exports.
However, since Sri Lanka’s private savings rates are high, not all inflows turn into imports, unless private credit allows investors to take the savings and import goods.
Amid a strong pick up in private credit, investment goods and base metals imports rose to 476 million dollars in October 2025, from 381 million dollars last year.
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Investment goods imports grew 28.7 percent to 425 million dollars, mostly due to 55.4 million dollars of commercial vehicles.
Personal vehicle imports grew to 205.6 million US dollars from just 2.0 million dollars last year.
Analysts had warned earlier that if rates were cut amid private credit recovery based on statistical claims that historical inflation was low, rejecting classical economic theory, it would be difficult to collect reserves.
Bank loans, unless given directly for imports like cars, may take six to eight weeks to hit the forex markets through cascading credit.
Any money printing, buy-sell swap by the central bank, can drive credit out of line with monthly dollar inflows and push up imports.
After inflationary open market operations were halted in 2025, there is no sustained money printing to finance credit, only some overnight injections through the ceiling rate for clearing transactions.
If the so-called ‘fiscal buffer’, where excess cash deposited by state banks in the central bank window is drawn down to manipulate interest rates down, new money is injected which can drive imports up.
When the excess liquidity is used up, interest rates can fall, but the rupee will also fall unless some dollars from reserves are given to importers.
Analysts had warned that no domestic fiscal buffer which is on-lent by state banks to other banks or used to invest in Treasury bills can be used to manipulate rates. (Colombo/Nov29/2025)
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