President Wickramasinghe gets a plus on the current account surplus

Fact Check

In his policy statement at the opening of the fifth session of the ninth parliament, President Ranil Wickremesinghe made two claims regarding the current account of the Balance of Payments (BOP): (a) the BOP deficit in 2022 was 1.9% of the GDP, and (b) there has been a surplus in the current account for 2023 for the first time since 1977.

To verify the claims, FactCheck.lk consulted the 2022 Annual Report from the Central Bank of Sri Lanka (CBSL), and the CBSL’s External Sector Performance press release for December 2023.

The current account balance reflects the difference between currency inflows and outflows in and out of the country in relation to trade in goods and services, movement of income, and other transfers of funds (excluding capital transfers). When inflows from the above are higher than the outflows, it results in a current account surplus.

On claim (a), the CBSL Annual Report records the actual current account deficit for 2022 as 1.9% of GDP, in line with the president’s figure.

On claim (b), although the precise current account balance for 2023 has not been published yet, figures are available for major components of the current account—including the trade balance, tourism earnings, and workers’ remittances. In 2022, the current account balance recorded a deficit of USD 1,453 million. In 2023, the major components of the current account listed above have improved—by much more than the deficit—by USD 3,398 million as illustrated in Exhibit 1. This suggests that the current account balance is in a surplus for 2023.

Historical data from the special statistical appendix of the CBSL’s Annual Report shows that Sri Lanka has not had a current account surplus since the 3.5% of GDP surplus in 1977 (see Exhibit 2). This was the year after the previous most severe economic crisis – see Additional Note 1.

Therefore, we classify the president’s statement as TRUE.

Additional Note 1: The six-year period before 1977 in Sri Lanka had some dynamics similar to the prevailing economic crisis: Sri Lanka experienced the lowest average real GDP growth of 2.7 % compared to 4% average growth in the period after independence until 1970s; Sri Lanka also experienced a serious scarcity of essential food imports, including rice, wheat flour, and sugar.

Additional Note 2: Even though the president refers to the “ගෙවුම් ශේෂයේ ජංගම ගිණුමේ හිඟය” (which could be correctly translated as “current account deficit of the balance of payments”) in his speech as published on the President’s Media Division website, the English translation published on the same website translates it incorrectly as ‘balance of payments’.

Exhibit 1:  Balance of Payment components for the full year 2022 and 2023

Exhibit 2: Current account balance components (share of GDP), 1959 to 2023