The government last Saturday imposed a series of temporary measures to cut consumption imports drastically with a view of fending off the pressure on rupee, which has depreciated over 10 percent so far this year against the US dollar.
In a surprising move, the Finance and Mass Media Ministry said the issuing of vehicle permits to Members of Parliament would be suspended for a period of one year with effect from Saturday (Sept. 29) midnight.
Lawmakers in Sri Lanka hardly impose austerity measures on themselves despite demanding the ordinary citizens to tighten their belts to face economic difficulties.
However, it remains to be seen how many parliamentarians of the 225, are yet to utilize their tax-free permits as almost all of them—both ruling party or Opposition—are seen driven on ultra-luxury vehicles, presumably imported ones using their vehicle permits.
Meanwhile, the Finance and Mass Media Ministry also slapped a 6-month suspension on concessionary permits issued to entitled State sector employees with effect from the same date.
“No Letters of Credit will be permitted to be opened based on these permits during this period,” Finance and Mass Media Ministry said.
The ministry further said importation of vehicles for government ministries, departments, statutory boards and State-owned enterprises would be suspended with immediate effect until further notice.
Vehicle imports have always been a prime reason for the outflow of hard-earned foreign exchange from Sri Lanka.
Whenever the interest rates come down, Sri Lankans tend to import more vehicles, which is understandable, given the pathetic state of the country’s public transport system.
Import duties on vehicles are also been tweaked by power-hungry politicians from time-to-time to rally votes.
Slightly deviating from government’s so-called green transport agenda in the last budget, the Finance and Mass Media Ministry also said the Loan to Value Ratio (LTV) for hybrid vehicles would be revised from 70:30 to 50:50.
Importers of all vehicles other than buses, lorries and ambulances will also have to keep a 200 percent cash margin at the time of opening of Letters of Credit.
According to the Central Bank, personal vehicles worth of US$ 813 million have been imported to Sri Lanka in the first six months of this year, an increase of over 100 percent over the same period last year.
Meanwhile, recognising the liking of Sri Lankans towards household electrical appliances and mobile phones, the Finance and Mass Media Ministry also imposed a 100 percent cash margin requirement on the import of refrigerators, air conditioners, televisions, perfumes, washing machines, footwear, tyres and telephones including mobile phones.
“However, though these measures will be effective temporarily from Saturday 29, 2018, the government will continuously monitor the exchange rate fluctuations and take appropriate action accordingly,” the ministry said.