Green light for motor vehicle imports by 1Q, 2025 – Semasinghe
Government will most likely lift the ban on import of private motor vehicles from the end first quarter of 2025, said state Minister for Finance Shehan Semasinghe at the annual general meeting of the Ceylon Chamber Import Section in Colombo on Wednesday.
He said that a decision in this regard would be taken at the end of August after the government carefully studies the removal of this ban as a sudden removal of it can once again have a negative impact on the economy. A stable macroeconomic environment is one of the primary requirements for business to succeed and the government under two years has created it by bailing out the country from its worst economic crisis.
“When businesses succeed they create jobs, and when productivity increases it results in higher real wages and improved well-being of the community as a whole. Importers have been among the most affected by the recent economic crisis.
The macroeconomic policy measures, although painful, were necessary to restore stability in the economy. The pain of not doing these reforms would have been infinitely greater than the reforms themselves. “For instance, people are quick to note the increased tax rate, but often fail to recall that 70% of rupee income that got eroded through inflation, which is far more damaging than any of the tax increases.”
Today inflation in Sri Lanka is 1.7% (June 2024), where other countries that underwent similar debt distress still face double digit inflation as Inflation in Ghana was 23% in May 2024, Zambia 15.2% in June, Suriname 21% in April.
Other countries which have made less progress in reform efforts are in far worse shape. “Lebanon has inflation of 52% and Venezuela 59% as of May 2024. Argentina still has inflation of 276% although the new administration is taking steps to bring inflation under control.”
In the last two weeks some significant milestones in the economic stabilisation process were achieved. Some have also claimed that Sri Lanka’s debt restructuring process has been far slower than other countries that have gone through the same process which are false comparisons.”
For instance Argentina and Ecuador, which commenced debt restructuring in early 2020, completed their restructuring in under a year.
“However, in reality both countries only concluded their bond holder restructuring within a year. In both cases it took almost 3 years to conclude debt restructuring with their official creditors!”
Argentina reached agreement with the Paris Club in October 2022 and Ecuador reached an agreement with Chinese lenders in September 2022. Sri Lanka’s comprehensive debt restructuring including domestic debt, official debt, bondholders and other commercial debt, which remains one of the fastest thus far among middle income countries in recent years.
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