ECONOMYNEXT – Sri Lanka has extended import bans for three months on a wide variety of goods and started a license regime on other goods in an import substitution drive after money printing brought currency pressure on top a Coronavirus crisis.
Sri Lanka is relying on a law widely used to control imports and cripple economic activities in the 1970s as the central bank was unable to deal with the collapse of the Bretton Woods system which also sent oil prices up.
But the controls are now coming despite oil prices falling.
The bewildering array of controls including outright bans, halting imports under licensing, allowing import if there is export value addition of 20 percent.
The import of a series of items have been banned for 90 days from April 16.
Some items have been banned except under a under licensing procedure for 90 days from May 22.
However exporters would be allowed to import inputs if they use funds in foreign currency banking unit or if it is financed by the foreign buyers.
Some items have been allowed under a if there is 20 percent value addition in export and if the funds are brought back to Sri Lanka within 60 days.
Some items are allowed if there are no domestic inputs and value addition is 35 percent. They would be allowed if they are financed by foreign buyers on 30-60 days credit.
Some items such as sugar, cement or palm oil are allowed under 180 day suppliers credit or using or using foreign currency banking unit deposits
These items banned for 90 days from April 16 include ornamental fish, fish fillets, vegetable and rice including basmati rice and broken rice.
Rice imports have been banned as price controls triggered shortages in the domestic markets.
Flour from grains other than wheat flour, peanuts, chewing gum, confectionery, chocolate, spaghetti, biscuits, aerated waters, beer and vinegar.
Building materials such as marble, quartz, granite, paints, plastic pipes, water and bathroom fittings, flooring, windows, doors, panels, curtains, ceramic tiles.
Many plastic items.vehicle tyres, suitcases, leather goods, furniture, clothing, slips, jackets, pantyhose, scarves, ties, shoes, hats.
Perfumes, colognes, sunscreen, make-up, deodorants, shaving foam,
These includes arecanut, pepper, dried fruits, some aerated waters, cement and concrete items, piston engines, marine engines, buses, engine parts.
Download Import-control-list-lgfull import control and licensing order from here.
The controls are coming despite Sri Lanka making strong gains in Coronavirus and is ahead of many other countries and the central bank injected large volumes of money in March amid a spike in private credit.
Private credit is expected to ease and domestic consumption had already fallen due to curfews.
Economists have analysts have called for reform of the central bank and curtailing its ability to inject excess liquidity to trigger currency pressure and allow economic agents to carry out their activities in peace. (Colombo/May23/2020)