With no foreign cash coming in as the tourism and foreign remittances crippled in economic setbacks, the government is now allowing many imports to move forward even under difficulties, Finance Ministry sources said.
The government has neither banned nor imposed controls on imports except for vehicles and gold, as some have commented at various occasions and thus anybody can import anything without an issue, according to the Central Bank.
“People can import whatever they want but we have to import the ones that everyone needs,” said Central Bank Governor Ajith Nivard Cabraal, making clarity on the recent decision to bring the licensed banks also to bear part of the import bills of essential goods.
Sri Lanka had to impose import controls on certain goods since March 2020, predominantly to preserve foreign currency and the number of goods added to the list stretched over time as part of the government’s policy on import substitution, which proved to be a complete flop.
What really happened was the cronies, who got protection from foreign competition, took advantage at the expense of the hapless consumer, who is now paying higher prices even for the staples.
Turmeric and rice are classic cases in point, as people are now paying more than double the price for a kilo of rice and other essential commodities than before the pandemic two years ago.
“Actually, we have not placed any restrictions other than for vehicles and items like the tiles for which the restrictions were placed for other reasons and gold. The rest of it is all allowed,” Cabraal said.
Despite there are no import controls except for a handful of items, importing has become a nightmare, as traders find it extremely difficult to open letters of credit with their banks, due to the prevailing dollar shortage.
As seen from the interim reports filed by most of the companies engage in trading, they cited the foreign exchange shortage next to the cost of inflation as the biggest issue facing them in carrying out their business operations.
Sri Lanka has to either float its currency or raise interest rates or do both to ensure that it can trade freely with the world without undermining the economic prosperity of its people, as happened through its post-independence history.
Lack of competition and economic freedoms have kept the people of Sri Lanka in poverty and they would continue to remain impoverished unless economic freedom and competition are not ensured.
The government has adopted this stance following the issuance of the EU mission in Colombo ‘s statement urging Sri Lanka to do away with the current import ban imposed in the wake of the debilitating economic crisis caused by the corona pandemic and inconsistent and back firing policies, economic experts said.
Sri Lanka imposed restrictions to save foreign reserves as major revenue sources, such as tourism, garment trade and foreign remittances dropping sharply were affected by the pandemic.
EU also expressed concerns over Sri Lanka withdrawing from the Geneva Resolution, 30/1 co-sponsored by the previous government in Oct 2015.
