Sri Lanka is gearing up to relax its stringent vehicle import restrictions, aiming to boost external adjustment, according to a recent IMF Staff Report prepared for the Executive Board’s consideration on June 12, 2024. The Sri Lankan authorities have developed an initial roadmap to gradually lift the ban on vehicle imports, with a phased approach set to commence in the third quarter of 2024.
Starting in Q3 2024, the importation of public passenger and special purpose vehicles will be permitted, followed by goods transport vehicles in Q4 2024. By 2025, the restrictions on the importation of all remaining vehicles are expected to be lifted. The detailed plan, which will address the tax and reserve accumulation implications, is anticipated to be finalized by June 15, 2024.
This strategic move is part of a broader effort by Sri Lanka to relax its remaining administrative Balance of Payments (BoP) measures, including exchange restrictions, Multiple Currency Practices (MCP), and capital flow measures (CFMs). The authorities have committed to developing a comprehensive plan for these adjustments by the end of May 2024, signaling a significant shift in economic policy aimed at stabilizing and revitalizing the country’s economy.