The Central Bank’s proposal to allow vehicle imports for persons who can pay in foreign exchange to import vehicles and pay taxes in hard currency has been placed under the carpet by the Finance Ministry, informed sources said    

The proposal was made by Central Bank Governor Ajith Nivard Cabrall with the aim of increasing tax revenue and resurrect the local motor traders (importers) bankrupted by import restrictions and earn much needed foreign currency.

But the letter sent by the Central Bank to the treasury three months ago is still in the back burner without taking any action to find a solution to  the present crisis in motor trade and  drop in tax revenue.,    

.He noted that Non-Resident Foreign Currency (NRFC) account holders – now called Personal Foreign Currency Accounts – would be permitted to use their resources to import a vehicle provided they would pay the applicable duty in hard currency.

 “If the vehicle is paid for in hard currency and not converted rupees, and the duty also accrues to the government in hard currency, I don’t see any harm, in fact it would be good,” he said.

It would also mean that there’s are new vehicles coming into the country not paid for by rupees converted into hard currency plus a hard currency duty stream, an analyst said.

Banning vehicle imports on account of the present foreign exchange crunch has cost the government an immense revenue stream further it has hit local motor traders and also Sri Lankan expatriates in Japan who are in the same vehicle trade. 

 The Sri Lankan Automobile Association of Japan (SLAAJ consisting of over 100 members, boasts a presence in more than 40 markets worldwide.

 Unfortunately, even such an impressive collection of businessmen is not immune to the overwhelming effects of the sudden import ban. 

With 1,364 units of stock specifically bought for the Sri Lankan market prior to the embargo, SLAAJ members are forced to re-sell them at less than half the purchase price due to the drop in demand. 

For a lot of them, it’s nothing short of stripping away half of their capital, an irrecoverable blow to any business. 

Although based abroad, as an organisation consisting of only Sri Lankans, each member contributes to re-investments in Sri Lanka, and supports over 2,000 Sri Lankans living in Japan, all of whom are facing an uncertain future.

 The continuing ban on vehicle imports has jeopardized the jobs of around 100,000 employees directly involved in the industry and its ancillary services.In terms of indirect dependents on the industry, 400,000 persons face the risk of losing their livelihoods as the import ban will ultimately sound the death knell to the trade”, s Arosha Rodrigo, Hony. Secretary of the Vehicle Importers’ Association of Sri Lanka (VIASL) disclosed

Sri Lanka’s unplanned shift to organic farming from chemical based agriculture practices has triggered a man-made crop disaster and incurred a massive loss of around US$1.04 billion, official provisional estimates and data of trading economic indicator models showed.

The total cost (fertiliser and rice imports) from the government’s attempts to transform the country’s chemical fertiliser farming to organic farming was $1.84 billion whereas all this cost could have been saved if the authorities had allowed the import of chemical fertiliser, spending only $400 million, according to a Finance Ministry source.

Sri Lanka is grappling with a severe food crisis. Food prices have skyrocketed and people are suffering from food inflation leading to potential economic crisis, an economic expert said.

The Finance Ministry and the Central Bank have to provide foreign exchange to import rice and essential food commodities when the country is struggling to find dollars, official sources said.

The total cost for rice imports will be $180 million and if the government had to import vegetables and fruits to meet any shortage, then the total food commodity import bill will be in the region of over $650 million, the ministry official said.

It has been planned to spend Rs. 3.8 billion to purchase organic fertiliser from local producers during the current Maha cultivation season.

The cost to import nano nitrogen liquid fertiliser from India is $44.2 million while another sum of $63.7 million has been paid to import 30,000 tons of potassium chloride fertiliser up to now.

Sri Lanka’s unplanned shift to organic farming from chemical based agriculture practices has triggered man made crop disaster incurring massive economic loss of millions of dollars.

The total economic loss up to now was around US$ 1.04 billion ($1044.8 million), official provisional estimates and data of trading economic indicator models showed.

Sri Lanka’s decision to shift to organic farming has been taken under economic pressure due to dwindling foreign exchange reserves, depreciating currency and loss in revenue, several economic experts said.

But the back firing of this decision of trying to force organic farming overnight without following a phasing out programme for natural farming along with inorganic farming has now compelled the government to find dollars for food imports.

• The Finance Ministry and the Central Bank are in compulsion to provide the required foreign exchange to import rice and essential food commodities at a time the country is struggling to save dollars, official sources divulged.

The trade ministry is now taking measures to import 300000 metric tons of rice with a cabinet approval granted in its first meeting this year held on Monday 10 spending around US$ 134 million amidst a severe dollar crisis at present.

It will also import 100,000 Metric Tons of rice from Myanmar in order to maintain a buffer stock via State Trading Corporation at a cost of $46 million.

Sri Lanka is on the verge of facing unfavorable impacts on food security, agriculture industry revenue, foreign exchange earnings and rural poverty pushing the country into a grave crisis, official statistics and mathematical modeling data revealed.  

This was the direct result of shifting the current local agricultural practices to organic farming without considering the technological, environmental, and economic costs and benefits, 

On top of it the government has allocated Rs. 40 billion to compensate farmers for the losses incurred during this Maha season due to the government’s policy of banning the use of chemical fertilisers.

The government has paid $ 6.9 Million to Qingdao Seawin Biotech Group Co., Ltd of China as per the Letter of Credit opened for the purchase of organic fertiliser after rejecting the shipment of 99,000 metric tons of organic fertiliser at a cost of $ 63 million.

 In addition the country’s transformation to organic farming  from the present practice has cost the country more than US$ 800 million from the import of chemical fertiliser after the partial lifting of the ban, spare parts to manufacture machinery to produce organic fertiliser locally and owing to the loss of export crop production.

In the wake of fuel short supply due to the dollar crisis, Ceylon Electricity Board (CEB) is preparing to purchase fuel directly from the Indian Oil Company (IOC) to meet the fuel shortage.

Power Minister Gamini Lokuge says that the CEB will purchase fuel directly through IOC today Monday (31st) and the day after tomorrow (1st).

He states that a decision will have to be taken tomorrow regarding the amount of oil required by the CEB for the next week.

Minister Lokuge noted that a programme will be launched to obtain electricity from private power plants on a short term basis.

“At present, we are getting oil. From Monday we have to see how to get oil for next week. We have discussed this with the IOC. 

What we are doing is to maintain the power supply without any disruption. That is what the President told us. Let the CEB work for that. 

The Petroleum Corporation, too, should act accordingly. In addition, the Petroleum Corporation has permitted us to import oil directly. We will discuss that as well. I think Indian Oil is trying to get us oil. We are working with the Ministry of Finance on this,” he added.

Meanwhile  Sri Lanka’s energy minister Udaya Gammanpila has warned of daily power cuts up to 4 hours if the country fails to secure a “large loan” by March 2022.

Sri Lanka has been facing a severe foreign exchange shortage with falling reserves. This has led to the currency losing value, making imports costly.

The country is also grappling with a shortage of almost all essentials, including fuel. The state power units have been unable to run turbines, forcing the government to impose power cuts are at peak hours.

The minister stated that the country must be prepared to make the necessary sacrifices in this regard, and asked the state’s politicians to lead it by example. 

Gammanpila also stated that Sri Lanka will have to import fuel with the existing limited foreign reserves, at least until the monsoon season begins in April.

Speaking further, he said that the country will have to generate electricity by using fuel until the monsoon season.