ECONOMYNEXT – Sri Lanka cannot progress with import bans and the control imposed during a crisis are being reviewed progressively, there will be no economic crisis from relaxing imports, State Minister for Finance Ranjith Siyambalapitiya has said.
“Import controls were imposed on more than 3,000 items during the crisis period. ” Minister Siyambalapititya was quoted as saying at a meeting in Avissawella.
“We are removing import restrictions from time to time after an in-depth analysis. There cannot be another economic crisis from removing restrictions. A country cannot go on with import controls.”
In 2021 and 2022, import controls failed to stop the crisis as large volumes of money were printed to cut rates and the liquidity went as credit to investments which then triggered imports of building materials and capital goods.
Siyambalapitiya told reporters that on August 03, when import bans on 300 items were lifted that only 1 percent of the import bill of the country was spent on the items over the previous 5 years.
“We’re always talking about negative growth,” he said at the time. “For economic growth to be positive, for the economy to expand, a country needs free trade, particular free international trade.”
As long as imports are funded by earned money from abroad there is no pressure on the currency.
However pressure on the currency comes when the central bank injects liquidity to cut rates with newly created money, which then results in reserve losses.
Speaking to reporters, yesterday (20), Siyambalapitiya said, “We had to suspend more than 3000 HS codes in order to prevent outflows in our reserves. We have now increased the value in the reserves beyond 3 billion dollars.
Considering the needs of a positive economy, the most important aspect of expansion is to have sufficient facilities towards a global market.”(Colombo/Aug21/2023)
