Sri Lanka to remove 200-pct cash margin on vehicle imports
ECONOMYNEXT – A 200 percent cash margin on vehicle imports will be removed in the near future, Finance Minister Mangala Samaraweera said.
But taxes were further hiked on cars.
The cash margin was jacked up in 2018 after the central bank generated monetary instability by printing money to keep artificially low interest rates, while operating a pegged exchange rate with multiple convertibility undertakings.
Sri Lanka also hiked taxes on cars and so-called luxury goods to make up for monetary policy errors in a classic ‘impossible trinity of monetary policy objectives’.
In the last quarter, capital flight was worsened by a political crisis. (Colombo/Mar05/2019)