The ban on vehicle imports will be lifted in three phases from October 1 as part of a broader economic reform strategy linked to the International Monetary Fund (IMF) Extended Fund Facility (EFF) programme, said an official statement issued by the office of Sri Lankan President Ranil Wickremesinghe on Friday.
The ban was imposed during the economic crisis
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, the President’s Media Division said. With the outbreak of COVID-19 in 2020, Sri Lanka imposed import restrictions to conserve foreign exchange reserves. The need then was to use dwindling foreign reserves for essential imports such as medicine, fuel and food.
Foreign Minister Ali Sabri gave information
In the matter, Sri Lankan Foreign Minister Ali Sabry said in a post on X, “With a significant improvement in foreign exchange reserves and strengthening of the rupee, the Cabinet of Ministers has decided to lift all vehicle import restrictions until February 2025. This decision is part of our ongoing efforts to restore normalcy in the economy and meet the needs of our people.”
The ban will be lifted in three phases
Under the first phase, import of public transport vehicles will be allowed from October 1. The second phase of allowing import of commercial vehicles will be from December 1. The third phase will come into effect from February 1, 2025, allowing import of motor cars for personal use, the statement said. All imports will also be restricted to less than three years of manufacture.
Economic activity expected to get a boost
Imports of new vehicles are expected to boost economic activity by increasing government revenues, especially from vehicle imports, which have historically been an important revenue source for the country. Since the resumption of imports will put pressure on foreign exchange reserves, additional customs duties will be imposed to mitigate the impact. The exhaustion of foreign exchange reserves in April 2022 led to an unprecedented economic crisis in Sri Lanka, leading the island nation to declare its first-ever sovereign default.