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Sri Lanka slaps import taxes on more fresh, dried fruits after printing money

ECONOMYNEXT – Sri Lanka has slapped more import taxes on fresh and dried fruits including pears, apricots and peaches for six months from June 17, as more trade barriers were erected amid money printing and currency falls.

A special commodity levy – an all inclusive import tax – of 350 rupees was slapped on a kilogram of apricots, 330 rupees on source cherries, 310 rupees on peaches, 310 rupees on plums and sloes, 285 rupees on grapefruit and 300 rupees on dried grapefruit.

Clementines were taxed at 120 rupees a kilogram, with dried ones taxed at 250 rupees a kilogram.

Sri Lanka has suspended or halted the import of a large number of goods, in the worst trade controls slapped since the break of the Bretton Woods in 1971.

But some foods, especially those that are needed for the tourism industry are allowed in at high taxes.

After the US targeted an output gap in the Middle of the Vietnam War, under then Fed Chief Arthur Burns who was pressured by President Nixon to print money, the entire Bretton Woods system collapsed.

The US imposed so-called Nixon shock trade controls for a few months and Sri Lanka closed the entire economy with draconian trade and exchange controls, leading to shortages, smuggling and black markets and price controls.

In 1978 the economy was re-opened but the central bank was not reformed, leading to continued monetary instability.

Sri Lanka’s rupee fell close to 200 to the US dollar after unprecedented money printing in March and April but private credit has since slowed.

After controlling imports people have been asked to grow food including horsegram.

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But some foods had been allowed in at high taxes.