Vehicle import suspension could stay for a while, at least till external conditions improve: Govt.

The government said there are neither plans nor space to immediately open up vehicle imports into the country, after the budget presented last week wrapped up without making any reference to the matter, dashing the hopes of many who waited for the budget to provide some relief after 20 months under import restrictions. 

Commenting on the matter Treasury Secretary Sajith Attygalle said the current external sector conditions don’t allow the resumption of vehicle imports but did not rule out to revisit the restrictions no sooner the current foreign exchange conditions ease. 

“The space available to open up is limited. And I think you will agree with that,” Attygalle told a post-budget forum organised by the Centre for Banking Studies of the Central Bank, during the weekend. 

The country was forced to temporarily shut imports of vehicles since late March last year, as the economic shutdown necessitated in earnest at the time to contain the virus spread immediately, soon dried up foreign currency inflows from exports, remittances, tourism and direct investments. 

Although the government wanted to resume such high-ticket imports since the middle of this year, the plans were scuttled and the economy was further plunged into deep foreign exchange and broader economic downturn since around June this year, after the authorities had to reimpose restrictions since mid-April to bring the resurgent virus under control.  “When things get better, we will definitely remove these restrictions because we are not very happy to continue with these restrictions. 

That I have to admit,” Attygalle said, in what could be an attempt to present the government’s economic and trade policy is by no way to espouse import restrictions and is supportive of the open market economy. 

“But given the circumstances, certain measures have to be taken. So, until the balance of payment side or the external side improvements become at least visible, these restrictions will be there for a while,” he added.

In the run up to the budget last week, there was a proposal and an attempt by certain parties, with the support of the Central Bank, to reopen vehicle imports paid via foreign currency, as such a mechanism would not burden the reeling external sector. 

The Central Bank in October said it observed in what could be similar to a bubble in prices in the vehicle market, which could threaten the price stability of the economy and therefore, would present a proposal to the government to see if an alternative way could be found to resume imports. 

However, the budget presented last week disappointed many who were waiting to hear any positive news about vehicle imports. 

Meanwhile, the government also thinks that the current vehicle stock in the country is sufficient for at least seven more months and therefore, does not pose an urgency. 

“So, I don’t think it’s a priority. Some may disagree with me but the available vehicle fleet is adequate at least to the next six to seven months. And we will not immediately open up and that’s my view about it,” Attygalle said.