In a recent gazette notice, President Ranil Wickremesinghe of Sri Lanka has approved the import of vehicles that were previously banned, including sports utility vehicles (SUVs) and double cabs, for several ministries and state agencies.
The Ministry of Labor and Foreign Employment is granted permission to import an SUV, while the Ministry of Health is authorized for 21 double cabs, and the Ministry of Education can bring in two buses.
Moreover, Sri Lankan Airlines has been given the green light to import three ramp coaches for economy classes, reflecting the country's increasing focus on tourism.
This move marks a shift in import controls that were implemented during the tenure of President Gotabaya Rajapaksa, following economic policy adjustments.
President Rajapaksa's administration had imposed controls after employing rate cuts with printed money to stimulate growth and target potential output.
The import control law, initiated in 1969 by economic advisors under Prime Minister Dudley Senanayake, was part of the historical context. In 1968, Sri Lanka witnessed an 8.2 percent surge in output with inflationary central bank operations, leading to consecutive balance of payments (BOP) deficits for two years. The 1960s also marked the beginning of Sri Lanka's engagement with International Monetary Fund (IMF) programs.
By 1971, amidst the collapse of the Bretton Woods system, Sri Lanka transitioned into a 'closed economy.' The country implemented both trade and capital controls, particularly during periods of mis-targeting rates, characterized by rate cuts enforced with reverse repo operations. The recent decision to allow specific vehicle imports for government use indicates a shift in economic policies and import restrictions in Sri Lanka.
