President to take decision: US$ 800 million drain on foreign reserves, but Govt. will earn tax revenue of Rs. 340 billion
The ban on motor vehicle imports is set to be lifted early next year if recommendations from a committee comprising Treasury officials that the move was required to meet revenue targets set by the International Monetary Fund (IMF) are to be accepted by the Government.
The committee’s recommendations will be submitted to President Ranil Wickremesinghe for him to take a final decision as Finance Minister and make an announcement about the imports. A senior Treasury official said that if the vehicle import ban was not lifted by next year, they would not be able to achieve the revenue targets, and therefore the committee has decided that vehicle imports should be normalised.
The committee had taken the decision, taking into consideration the enhanced revenue target set by the IMF for next year.
He said that the US dollar rate could not be controlled for a prolonged period, and therefore it was important to lift the ban.
However, the specification of vehicles to be imported, including the year of manufacture, is yet to be decided.
The committee had previously recommended that the import of 1,000 vehicles, including coaches and vans, be allowed for the tourism sector. This was permitted recently.
Another senior Treasury official said the increase in foreign reserves too had been taken into consideration. He said the imports of vehicles would not have an adverse impact, though the previous situation was that imports were having their effects on the economy.
Sri Lanka’s gross official reserves grew from 431 million US dollars to 4,951 million US dollars in March this year and from 4,520 million US dollars in February, according to data from the Central Bank.
According to the Treasury official, with the lifting of the ban on vehicle imports, Sri Lanka is likely to lose up to US$ 800 million a year, but in turn, it will earn a tax revenue of Rs 340 billion, thereby helping to meet the local revenue targets.
Source: Sunday Times