Government will ease imports restrictions gradually, but priority to local industry – Cabraal

The Government will gradually ease restrictions on imports that were put in place to reduce the outflow of foreign exchange, but it will be done in a manner that the emerging local businesses are not negatively impacted, State Minister of Money, Capital Markets and State Enterprise Reforms Ajith Nivard Cabraal told Parliament yesterday.

“The Government will assess the situation and balance the economy and competing interests. We had to take certain temporary measures to take the economy forward but will relax them gradually,” Cabraal said.

Cabraal said that the country’s foreign reserves have to stabilise before more import restrictions can be eased.

“Sri Lanka’s foreign reserves were around $ 8.2 billion prior to 2015. However, it had come down to $ 7.2 billion in 2019, but this should have been around $ 15 billion had the economy been managed properly. We would have been able to manage without curtailing imports if our foreign reserves were at the expected level of $ 15 billion,” the State Minister said.

Cabraal explained that the Government was facing a task of maintaining a stable foreign exchange inflow due to the outbreak of the COVID-19 pandemic much like many other countries. “The other option available in these circumstances was to fall back on settling the country’s debts which have shown the country in a negative light. We chose the option of curtailing imports instead,” he said.

He was responding to a question raised by Opposition Leader Sajith Premadasa on when the Government plans to ease import restrictions, and said the curtailment of motorcycle and spare parts imports are inconveniencing and affecting the livelihood of many people.

Premadasa requested the government to lift the import ban on motorcycles and said around 500, 000 people are risking losing their livelihood as a result of the ban of imports of motorcycles and spare parts.

The State Minister said the Government is well aware of the problems faced by restrictions on motorcycle imports and said it is planning to assemble motorcycles locally and also set up tyre-making factories.

“Our plans will not end up like the Volkswagen plant that the previous Government planned, but never got off the ground,” he said.

(Source: Daily FT)