Government rules out any prospects of relaxing ban on vehicle imports this year

“Once the economy and foreign reserves rebound to pre-crisis levels, we can then go ahead with lifting the ban on vehicle imports”- State Minister of Finance Shehan Semasinghe

The government on Monday ruled out a possible relaxation of the ban on vehicle imports this year due to possible negative impact on the country’s limited foreign exchange reserves and the

overall economy.
“We are not in a position to relax import restrictions on vehicles this year. Once the economy and foreign reserves rebound to pre-crisis levels, then we can go ahead with lifting the ban on vehicle imports,” State Minister of Finance Shehan Semasinghe said.

The Parliamentary Committee on Economic and Physical Plans Chaired by MP Mahindananda Aluthgamage last week recommended the government to take an immediate decision on the ban on vehicle imports to boost revenue collection by Sri Lanka Customs (SLC).

SLC officials told the Parliamentary Committee that the agency was able to collect only Rs.330 billion in revenue up to May this year, and projected that the full-year revenue would fall below the target of Rs.1,226 billion, reaching only Rs.783 billion by year end. While acknowledging the shortfall in State revenue, Semasinghe noted that alternative measures are already underway to address the issue. However, he assured that the government is in full support of vehicle assembly, particularly electronic vehicles in the country. Meanwhile, Semasinghe shared that the government would submit a detailed report to the International Monetary Fund (IMF) and the country’s creditors by end of this month with a timeline on lifting the current import restrictions in place. By lifting import restrictions on any product, he noted that the government would consider implications on the country’s foreign reserves, contribution to the economic growth, employment, and the impact on domestic industries.

He pointed out that the government has lifted the majority of import restrictions in a gradual manner, while emphasising that the remaining controls are limited to only around 900 goods, mostly consumer goods, hence with no impact on the SME sector.  The Finance Ministry expects a marked decline in inflation over the next two-month period as a result of the removal of majority of import restrictions and recent appreciation of the rupee. Inflation is projected to fall to single digits by the end of this quarter.