ECONOMYNEXT – Sri Lanka’s President Ranil Wickremesinghe has allowed the import of vehicles which are banned, including a sports utility vehicle and double cabs, for several ministries and state agencies, in a gazette notice.
Ministry of Labor and Foreign Employment will be allowed to import an SUV, the Ministry of Health 21 double cabs, and two buses for the Ministry of Education.
Sri Lankan Airlines would be allowed to import three economy classes ramp coaches. Sri Lanka has seen a surge in tourism.
Sri Lanka has imposed import controls during the tenure of President Gotabaya Rajapaksa after his economic bureaucrats cut rates with printed money to push up growth (target potential output).
The import control law was enacted in 1969 by the economic advisors of the Prime Minister Dudley Senanayake.
In 1968, Sri Lanka’s output was pushed up to 8.2 percent with inflationary central bank operations (mostly rural credit re-finance at the time) and there were BOP deficits for two years running.
Sri Lanka also started to have IMF programs in the 1960s. The 1960s also saw increased use of statistics to justify inflationary central bank operations in the US.
In 1971 the Bretton Woods collapsed and Sri Lanka went into a ‘closed economy’.
In order to operate a reserve collecting central bank with rate cutting powers, Sri Lanka imposes both trade and capital controls, which intensify in periods of mis-targeting rates (rate cuts enforced with reverse repo operations). (Colombo/Jan15/2023)