The economy is doing even worse than the annual Economic Survey for 2001/02 suggests. Central bank statistics covering 10-months of the fiscal year (up to mid-May) show that exports have tumbled, government spending has dropped, especially on development, and that service receipts continue to decline compared with the same period a year ago. Domestic credit is slow and the private sector is hardly borrowing. Government spending is slow and very little money going into development activities-regular spending was Rs 36.5 billion in mid-May, while development spending decreased by 17 percent to Rs 13.3 billion. Growth in revenue collection has almost disappeared at about one percent, given that it grew by about 21 percent in the same period last year.

Exports have declined by about 12 percent to Rs 41 billion, reflecting largely the slump in overseas exports. Export to third countries dropped by almost 38 percent to Rs 15.67 billion, from about Rs 25 billion in the same period last year. The Balance of Payments statistics based on data until March reported a major decline in receipts from services (including tourism). Even though transfer receipts (remittances) continued to grow and imports remained low, the central bank reported a current account deficit of Rs 10 billion, almost double that in the same period last year. The foreign exchange holdings increased by about 2 percent to Rs 104.5 billion in mid-May, but the share of convertible currencies has continued to erode (from about 78 percent last year to about 73 percent in May 2002).