Cash-strapped Sri Lanka ends ban on vehicle imports
COLOMBO: Sri Lanka on Tuesday announced the lifting of a five-year ban on vehicle imports, signalling further recovery from its worst economic crisis.
Information Minister Nalinda Jayatissa stated that buses, trucks, and utility vehicles will be permitted starting Saturday under a phased removal of restrictions imposed since 2020.
"We are proceeding cautiously to avoid a surge in imports that could deplete our foreign reserves," Jayatissa told reporters in Colombo.
"Depending on demand, we will consider opening imports for other vehicle categories such as cars, motorcycles, and three-wheelers."
He noted that the imports are essential for generating much-needed tax revenue, with the government aiming to cap imports at approximately $1.2 billion this year.
Current vehicle tax rates exceed 300%.
In 2019, Sri Lanka spent $1.4 billion on vehicle imports, the last full year before the import ban was enforced in March 2020.
The island nation previously attempted to lift the ban on commercial vehicle imports in August 2023, but importers were unable to open letters of credit while the country remained in default on its foreign debt.
Sri Lanka officially ended its status as a bankrupt nation in December after securing debt restructuring agreements with both bilateral and private creditors.
The country defaulted on its $46 billion external debt in April 2022, as it ran out of foreign exchange to finance imports, leading to severe shortages of food, fuel, and medicines.
Months of street protests resulted in the ousting of then-president Gotabaya Rajapaksa, who faced accusations of corruption and mismanagement.
His successor secured a bailout loan from the International Monetary Fund, which has indicated that the South Asian nation is on the path to recovery but still faces challenges.
By RSS/AFP
