When steady inflow comes in restrictions will be eased, but until that our hands are tied: State Minister Cabraal

September, 4, 2020

To avoid a possible foreign exchange crisis due to the economic hit caused by Covid-19, the Sri Lankan Government restricted imports, providing exceptions only for raw materials, pharmaceuticals, and oil.

Meanwhile, addressing an event in Colombo today (04), State Minister for Finance, Capital Market, and State Enterprise Reforms,  Ajith Nivard Cabraal also expressed his views in this regard.

Cabraal made these remarks whilst responding to a query on Government’s vehicle import ban, during the question hour session.

“When we made the assessment about imports, we did get the information from the Customs Department as well as the other departments, that we had a stock within Sri Lanka, which was sufficient for about two years.  So, that is one of the reasons why this restriction was prompted. I’m not saying that we should have that forever.  At the same time when you take a decision to make certain restrictions, you take that decision based on the available data and that data was the key factor in making that decision. Whether that is 100% correct or otherwise, I’m not sure. You got to take a decision at that time, like what will you do in your own business, depending on how much less pain you are causing in the situation."

"We do have a plan where we would like to see some assembly of vehicle, which is certainly on the cards and ‘COVID or no COVID’, we would like to see that happening and we would encourage companies to look at that positively and to see whether they can develop that as another industry in Sri Lanka. At the same time with regard to the importation, we do recognize that not everything can be done in Sri Lanka. We need to have good vehicles, but at the same time, we need to have the resources to do that. So, currently what we are experiencing is a resource constrain, particularly foreign exchange, because we have to conserve some of those for our loan repayments as well. So, in that context there would be this element of difficulty that you are undergoing, but, again we can tell you that it is not going to be a permanent feature. The moment we are in a position to lift that we would lift that, but then we have to look at the priorities that the country is now facing and once that is easing with other new revenue flows and as well as new foreign exchange flows coming in we are also going to do a new feature where the investment in treasury bills and treasury bonds from outside are going to be supported."

"At the end of 2014, we had something like $3.5 billion investment in Sri Lankan bonds. Today it had come down to too much less than that. By the end of 2019, it has come down to less than 500 million. So there was a gap of about $ 3 billion. We have to get that back. In order to get it back, we may need to do certain incentives, which we are now hoping to provide in the next few weeks. So, once it happens and when we see a steady inflow coming in, we would probably see some of those restrictions easing, but until such time you would find that our hands are also tied. Some things you like to do but unfortunately you have to find the time to do that and this time around we believe that it is on the cards but it would take some time and then we want you to bear with us during that time and hopefully we can make that shorter than longer."

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