Sri Lanka banned vehicle imports in 2022 after its economy crashed. Now the ban will be lifted in a phased manner, first for public vehicles, then
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Sri Lanka has announced to allow the import of vehicles in a phased manner from October 1. The decision has been taken after four years and is part of the island nation's efforts to restore its economy in line with IMF conditions.
An official statement issued by the Presidential Media Division (PMD) on Friday said the ban on public transport vehicles, commercial vehicles and private motor cars will be lifted in three phases as part of a comprehensive economic reform strategy linked to the International Monetary Fund (IMF) Extended Fund Facility (EFF) programme.
The PMD statement said the Cabinet's approval to allow motor vehicle imports comes after four years of “stringent import restrictions” that were imposed to preserve the island nation's foreign exchange reserves during an acute economic crisis.
With the outbreak of COVID-19 in 2020, Sri Lanka imposed import restrictions to preserve foreign exchange reserves, as there was then a need to use the dwindling resource for essential imports such as medicine, fuel and food.
The depletion of foreign exchange reserves in April 2022 has led to an unprecedented economic crisis in Sri Lanka, forcing the island nation to declare a sovereign debt default, its first since gaining independence from Britain in 1948.
Sri Lanka is currently in talks with the IMF, which has made external debt restructuring a condition of a US$2.9 billion bailout package to be released in tranches.
“With the significant improvement in foreign exchange reserves and strengthening of the rupee, the Council of Ministers has decided to lift all vehicle import bans/restrictions until February 2025. This decision is part of our ongoing efforts to restore normality in the economy and meet the needs of our people,” Foreign Minister Ali Sabri said in a post on X.
The PMD statement said that under the first phase, the import of public transport vehicles will be allowed from October 1; under the second phase, the import of commercial vehicles will be allowed from December 1, and under the third phase, motor cars for personal use will be allowed from February 1, 2025.
It added that imports of new vehicles “are expected to boost economic activity due to increased government revenues, particularly from vehicle imports, which have historically been an important revenue source for the country.”
It said that since resumption of imports would put pressure on foreign exchange reserves, additional customs duty would be imposed to mitigate the impact.
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First Publication Date: September 16, 2024, 07:54 AM IST