Sri Lanka's economic turnaround: Vehicle import restrictions eased for first time since 2020

Cash-strapped Sri Lanka has officially lifted the ban on the vehicle import which was put in place in 2020 to ease the pressure on foreign exchange reserves due to the COVID-19 pandemic, authorities said on Tuesday.

This will be with effect from February 1. President Anura Kumara Dissanayake has issued a gazette dated January 24 which ended the ban on vehicle imports imposed in early 2020 with the COVID outbreak. The ban was continued when Sri Lanka suffered its economic crisis triggered by forex shortage. In April 2022, Sri Lanka declared its first-ever debt default. Commenting on the lifting of the import ban the Cabinet spokesman and minister Nalinda Jayathissa said only trucks, buses and double cabs would be allowed in the first phase. 

President Dissanayake said last week that the government would allocate USD 1.2 billion for vehicle imports for the first phase. In 2019, before the ban came into force the island had spent USD 1.4 billion for vehicle imports. We will be wary of maintaining the dollar reserves, Jayathissa said. We will keep watching the reserves while trying to raise government revenue. So at which tax these imports would come would be soon announced. Having entered the IMF bailout the island's economy was turned around and the current levels of 6 billion reserves were reached aided by stringent austerity measures.

According to the IMF bailout and its rigid reform regime Sri Lanka has to achieve given targets for maintaining the reserves to avoid another balance of payments crisis as the one in 2022.

(Except for the headline, nothing has been changed by All India News Network in the PTI copy.)