CB takes further action to cut non-essential consumer imports

• Directs authorized dealers not to release foreign exchange under advance payment terms for importation of perfumes, toiletries, tyres etc.

In their latest action to ease the pressure on the sliding rupee, the Central Bank has directed authorized dealers not to release foreign exchange, which involves conversion of rupees into foreign currencies to pay for non-essential consumer goods, under advance payment terms.

The non-essential consumer goods subjected to this directive include perfumes, toiletries, pneumatic tyres, footwear, air conditioning machines and refrigeration and freezing equipment.

This comes on top of the recently implemented 100 percent cash margin requirement on refrigerators, perfumes, footwear, tyres and several other consumer durables item imports.  

The Department of Foreign Exchange of the Central Bank told the authorized dealers to apprise their customers i.e. importers of goods, on this requirement and said they are required to comply with the direction until further notice. 

The Finance and Mass Media Ministry and the Central Bank have already introduced a gamut of measures to cut the import of what they call ‘non-essential consumer items’ into the country.

Motor car imports have been discouraged heavily by slapping a 200 percent LC margin and LTV requirements.

 The government has also suspended the concessionary vehicle permit scheme that was available for selected public sector employees. 

Although the Finance and Mass Media Ministry also suspended the vehicle permits of the parliamentarians for a year, it has now transpired that all 225 of them have already utilized their permits by importing ultra luxury vehicles or selling their permits for millions of rupees to rich businessmen. 

Hence, it is a needed question as to whether these rulers have moral rights to tell the public not to buy their Marutis or Wagon R while travelling in ultra-luxury Toyota Land Cruiser V8s. 

The rupee has depreciated 10.5 percent so far this year against the US dollar.

Sri Lanka has seen a net outflow of Rs.74.3 billion from government securities so far this year.