Sri Lanka to end vehicle import controls by 2025: IMF report

Saturday, 15 June 2024 01:19 - - {{hitsCtrl.values.hits}}

The International Monetary Fund (IMF) has revealed that Sri Lanka is set to finalise a plan by today (15) to lift vehicle import controls, starting with commercial vehicles and concluding with all vehicles by 2025.

The move is part of a broader strategy to relax various import and exchange restrictions imposed over the past few years.

According to the IMF report, the Sri Lankan authorities have outlined an initial roadmap to phase out these restrictions. The plan begins with the importation of public passenger and special purpose vehicles in the third quarter of this year, followed by goods transport vehicles in the fourth quarter of 2024 and the rest by 2025.

“A detailed plan, including the implications on tax and reserve accumulations, will be finalised by 15 June 2024,” the report noted.

Sri Lanka is also set to remove several other exchange controls that have been criticised by the IMF as Multiple Currency Practices (MCP) and capital flow measures (CFMs) by the end of May 2024.

Over the period of 2020-2022, Sri Lanka introduced import restrictions on a wide range of goods, alongside measures that led to exchange restrictions and MCPs. The country also adopted new CFMs and tightened existing ones during this time.

The IMF report highlighted that, in alignment with the Extended Fund Facility (EFF) program, Sri Lankan authorities had relaxed most import restrictions by the end of 2023, with only vehicle restrictions remaining. Similarly, three out of six MCPs and three out of seven exchange restrictions were eased before the program’s first review.

“By removing these restrictions in a phased manner, the authorities will avoid having such measures substitute for the needed external macroeconomic adjustment,” the report read.

The report also noted that Sri Lankan authorities have been loosening some CFMs that were introduced or tightened since 2020 by increasing the limits on restrictions on capital flows. Analysts said the phased approach aims to ensure that the country does not rely on these measures as substitutes for necessary macroeconomic adjustments.

The planned relaxation of vehicle import controls and other restrictions is expected to contribute to the country’s economic stabilisation efforts and align with the broader objectives of the IMF’s EFF program, promoting sustainable economic growth and financial stability.