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Friday July 1st, 2022

Sri Lanka to allow export inputs despite import controls: EDB Chief

ECONOMYNEXT – Sri Lanka will allow inputs for export industries despite an import ban, a top official said, after import controls were slapped as the rupee came under pressure from liquidity injections amid a Coronavirus crisis and politicians asked the public to grow ‘kollu’ (horse gram) and vegetables.

The import ban will hit exporters who need imports to produce goods for exports.

“The Export Development Board has been given authority to authorize any imports that is required for any export for Sri Lanka,” Chairman Prabash Subasinghe, told an online forum organized by Advocata Institute, a Colombo-based think tank.

“We were informed about it yesterday evening and we are going to roll out a program on how it’s going to happen.

“We would give approval for anything as far as it is related to exports.”

Sri Lanka banned the import of so-called ‘non-essential’ imports including vehicles and electrical items, after printing money and undermining the credibility of the country’s soft-peg with the US dollar.

Monetary instability has been a key drawback for the county since the soft-peg was set up in 1951.

Sri Lanka published a list of items that banks are currently prohibited from financing or facilitating.

Minister Ramesh Pathirana said all items other than medicine and fuel would be banned and people should grow kollu (horse gram), undu, maize, and vegetables.

Sri Lanka halts imports of cars, electronics, perfumes, after soft-peg pressure

Sri Lanka to control imports except oil and medicines, grow vegetables: Minister

Similar programs were promoted in the 1970s, when the central bank printed money after the collapse of the Bretton-system of soft-pegs and the country was not able to come with a working monetary regime.

Singapore initially floated, which made the currency appreciate and then built a hard peg. Though Sri Lanka opened the economy in 1978 the central bank was not fixed. (Colombo/Apr16/2020)

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