Commenting at the release of the report this week, P B Jayasundera, the top bureaucrat in the finance ministry said that private sector needs to invest in agriculture to promote cultivation.
This would help reduce the 2 billion dollar import bill on food.
"The country's rising imports undermine the sustainability of the balance of payments.
"A well focussed development strategy to raise exports and reduce imports needs to be put in place", the annual report said.
The expansion of private investment is vital to achieve a faster export growth and maintain a moderate growth in imports and to reduce the trade deficit to a viable level, the report added.
The government aims to reaching self sufficiency in the production of cereal, milk, poultry and fish to promote food security and reduce import costs.
Petroleum imports dominate Sri Lanka's annual import bill.
The central bank figures for January to December 2011 showed US dollars 4.629 billion was spent on oil imports out of a total import bill of 20.2 billion dollars.
Food, beverages and other consumer goods had accounted for 9 billion dollars.
