The ban would be lifted from October 1 in three phases as part of a broader economic recovery strategy linked to the Extended Fund Facility (EFF) programme of the International Monetary Fund (IMF), an official statement from President Ranil Wickremesinghe’s office said on Friday.
The Cabinet’s approval to allow motor vehicle imports comes after four years of “strict import restrictions” imposed to preserve the island nation’s foreign exchange reserves during the acute economic crisis, the President’s Media Division said.
In 2020, when COVID-19 broke out, Sri Lanka imposed import restrictions to preserve its foreign exchange reserves. The need was to use the depleting foreign exchange reserves for essential imports such as medicines, fuel and food.
“With the significant improvement in foreign exchange reserves and the strength of the rupee, the Cabinet of Ministers has decided to lift all bans and restrictions on the import of vehicles by February 2025. This decision is part of our ongoing efforts to restore normality in the economy and meet the needs of our people,” Foreign Minister Ali Sabry said in a post on X.
In the first phase, imports of public transport vehicles will be allowed from October 1. The second phase, in which imports of commercial vehicles will be allowed, will take place from December 1. The third phase, which will come into effect from February 1, 2025, will allow imports of cars for private use, the statement said.
All imports would also be limited to products less than three years old.
The import of new vehicles is expected to “boost economic activity by increasing government revenues, particularly from vehicle imports, which have historically been a major source of revenue for the country,” it said. As the reintroduction of imports will put pressure on foreign exchange reserves, additional customs duties will be imposed to minimise their impact.
The depletion of foreign reserves in April 2022 triggered an unprecedented economic crisis in Sri Lanka, forcing the island nation to announce its first sovereign default.
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