Kumararatna, D. S., Economic Review
The relations between Pakistan and Sri Lanka in commercial, economic and social fields established since independence have continued to grow steadily and played an important role in the economy of both countries.
The table showing the turnover and balance of trade indicates the positive trends of upward movement in foreign trade of both the countries for the past ten years. The trade turnover, which stood at Pak. Rs. 97.0 million during 1970-71, has increased upto Pak. Rs. 957.2 million during the year 1984-85 resulting in a drastic change of the trend of trade and brought the balance of trade in favour of Sri Lanka. Until the financial year 1984-85 Sri Lanka had enjoyed a favourable balance of trade showing a steady growth in the total turnover of the trade. Further Sri Lanka on her part increased her imports from Pakistan particularly rice and as a result Sri Lanka's tea and Pakistan's rice continued to dominate the trade between the two countries for some years.
In recent years however, in addition to rice, import of raw cotton, cotton yarn and fabrics, dried fish, onions, chillies etc. have figured prominently. In 1985, Sri Lanka started sustaining an unfavourable balance of trade with Pakistan due to a more than 100 per cent increase in her imports
Trade Balance Year Turnover of Trade 1979-80 824.3 - 61.5 1980-81 719.6 - 119.0 1981-82 81.5 - 189.1 1982-83 635.9 - 394.8 1983-84 618.3 - 153.5 1984-85 957.2 - 219.0 1985-86 1312.9 + 444.2 1986-87 1345.6 + 153.4 1987-88 2192.0 + 525.8 1988-89 2310.2 + 254.2
Notes: Value in Pak Rs. million + = Balance of trade in favour of Pakistan - = Balance of trade in favour of Sri Lanka from Pakistan. During the year 1987-88, as a result, the balance of trade recorded an unprecedented value of Pak. Rs. 525.8 million in favour of Pakistan. During the year 1988-89 the balance of trade remained unfavourable to Sri Lanka with the trade deficit amounting to Pak. Rs. 254.2 million in value. However the total turnover of trade has increased by 180 per cent or Pak. Rs. 1485.9 million during the past ten years showing an expansion of commodities traded between the two countries.
Major items imported from Sri Lanka to Pakistan are tea, natural rubber, copra, fresh coconut, betel leaves, ekels, coir-yarn, tamarind, arecanuts and spices accounting for more than 90% of the total imports from Sri Lanka. Import of tea from Sri Lanka during the year 1988/89 has been Pak Rs. 570 million or about 20% of order to boost the sale of Sri Lanka tea in Pakistan market, the government of Sri Lanka firstly established Ceylon Tea Bureau's office in Karachi in 1973 and also concluded a special trading arrangement in December-1987, which was terminated in December 1988.
With regard to the items exported from Pakistan to Sri Lanka, the total exports valued at Pak Rs. 65.2 million during the year - 1971-72 has risen upto Pak Rs. 1282.2 million in 1988-89. Major items of export to Sri Lanka are rice, dried fish, onions, chillies, cotton-yarn, fabrics, pharmaceutical items, sports ware, leather goods etc. Since Pakistanis are considered as one of her best trading partners and therefore Sri Lanka always procures her essential items like rice, onions, dried fish, spices, cotton etc., from Pakistan although there are alternative sources available.
Pakistan and Sri Lanka are traditionally good partners in foreign trade. …