A vendor counts currency notes as she sells vegetables at a market place in Colombo, Sri Lanka, Thursday, June. 1, 2023. -AP
A vendor counts currency notes as she sells vegetables at a market place in Colombo, Sri Lanka, Thursday, June. 1, 2023. -AP
In a clear sign that the island nation is slowly but surely emerging from its worst economic crisis in decades, the Sri Lankan government announced on Saturday that the country has lifted import restrictions on nearly 300 items with immediate effect.
The island off India’s southern coast plunged into crisis last year as its foreign exchange reserves ran out. The government limited imports of more than 3,200 items, including seafood, electronics, and even musical instruments.
In April 2022, Sri Lanka declared its international debt default due to the forex crisis.
Sri Lanka’s economic situation has improved after it secured a USD 3 billion bailout package from the International Monetary Fund (IMF) in March. The IMF lifeline helped Sri Lanka bolster its foreign exchange reserves and stabilise the spiralling inflation.
“With the economy stabilising, import restrictions on 286 items have been lifted from Friday midnight,” the Finance Ministry said in a statement.
“Restrictions on 928 items will continue, including vehicle imports, which were banned in March 2020,” the statement said.
“Imported goods can help moderate prices by providing consumers with options and lower cost alternatives,” Shehan Semasinghe, the Minister of State for Finance, said.
In August last year, Sri Lanka slapped a ban on the import of 300 consumer items like chocolates, perfumes, and shampoos to tackle its economic woes.
Sri Lanka’s reserves grew by an impressive 26 per cent to touch USD 722 million in May, while the currency also rose by 24 per cent this year, according to central bank data.
The positive signs notwithstanding, Sri Lanka’s path to complete economic recovery is still arduous.
The country needs to complete debt restructuring talks with its creditors, notably China, India, and Japan, and implement key economic reforms by ahead of the first IMF review in September.
The IMF bailout, the 17th in Sri Lanka’s history, called for hard economic reforms such as tax hikes, utility rate hikes and divesting loss-making state business enterprises, which have been met with stiff political opposition.
India extended lines of credit worth over USD 4 billion to Colombo in diverse sectors including the supply of essential items, petroleum, fertilisers, development of railways, infrastructure, defence sector and renewable energy, according to the Indian High Commission here.
Sri Lanka’s unprecedented financial crisis in 2022 also sparked a political turmoil in the country, leading to the ouster of the all-powerful Rajapaksa family.
With inputs from agencies
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