Sri Lanka central bank concerned about motor vehicle imports: Governor
May 12, 2018 06:03 AM GMT+0530 | 1 Comment(s)
ECONOMYNEXT - Sri Lanka's central bank is "concerned" about growing motor vehicle imports, Governor Indrajit Coomaraswamy said indicating the monetary authority's pre-occupation with the trade deficit.
"We are concerned about it and focussing upon it," Governor Coomaraswamy told reporters.
"You know there are macro-prudential measures one can take if that spike in demand persists."
Motor vehicles imports rose 117 percent from a year ago to 121.5 million US dollars in February 2018, the latest trade data showed.
In the first two months vehicle imports rose 77.9 percent to 208.8 million US dollars.
Car trading behaviour can be an important sign of a recovery in economic activity and credit as Sri Lanka emerges from a balance of payments crisis, triggered by a money printing central bank in 2015.
In most advanced markets with high living standards, a second hand vehicle is the first large purchase a young person makes, ahead of the purchase of a house.
In Sri Lanka however cars are heavily taxed, though the elected ruling class gets tax free cars and their minions in state agencies get tax slashed cars.
However among the less affluent a motor cycle is the first significant purchase. In East Asia wide ownership of scooters has empowered the female population and brought them into the workforce in droves.
Among craftsmen like masons, carpenters, plumber and their helpers, three wheelers started to replace motorcycles when the new administration led a crackdown against their attempts to better themselves as the rupee came under pressure due to money printing.
In Sri Lanka due to heavy regulation and corruption in route licensing public transport has deteriorated and innovation and consolidation has been stifled. (Colombo/May11/2018)