COLOMBO: In a significant development for Sri Lanka’s automotive sector, the government has taken the step of rolling back certain vehicle import restrictions that were originally put in place in March 2020. This move marks a departure from previous policies and signals a more open approach towards trade in heavy vehicles.
Under the newly announced regulations, heavy vehicles such as buses, trucks, and tankers are now allowed to be imported into the country. This decision was conveyed through an official government notification issued by President Ranil Wickremesinghe, who also holds the position of finance minister. However, it’s important to note that the import bans on passenger vehicles, including cars, will remain unchanged.
This update arrives at a juncture when Sri Lanka’s economy has shown signs of stabilization over the past nine months. The country secured a significant $2.9 billion bailout from the International Monetary Fund (IMF), a move that played a pivotal role in reining inflation levels and initiating the rebuilding of foreign exchange reserves. Notably, Sri Lanka’s reserves experienced an impressive 26% growth, reaching a 19-month high of $3.8 billion in July. This achievement can be attributed to a boost in remittances and earnings from the tourism sector.
As a testament to the economic progress, the national currency has also demonstrated resilience, recording a rise of approximately 13.5% throughout the year, as indicated by central bank data. This positive trajectory showcases the nation’s commitment to financial stability and prudent monetary policies.
Yet, amidst these positive developments, challenges remain on the horizon. While the easing of the crisis is undoubtedly a positive step, Sri Lanka is still engaged in crucial debt negotiations with its creditors. The government aims to conclude these talks by September, coinciding with the first IMF programme review. Additionally, implementing key economic reforms is pivotal to ensuring the sustainability of the ongoing recovery efforts.
Although the Sri Lankan economy is anticipated to experience a contraction of about 2% this year, according to estimates from the central bank, this projection marks a significant improvement from the 7.8% contraction witnessed the previous year. The reform measures undertaken and the cautious approach towards policy changes are expected to drive the economy towards a more resilient and sustainable growth path.
