Sri Lanka Lifts Five-Year Vehicle Import in Hopes of Economic Recovery

As the nation began to show more indications of recovering from its worst economic crisis, Sri Lanka declared that a five-year restriction on the import of automobiles will be lifted. The limitations that have been in place since 2020 will gradually be lifted starting on Saturday, according to Information Minister Nalinda Jayatissa, allowing buses, trucks, and utility vehicles entry.

"We are moving very cautiously because we don't want a surge of imports that will deplete our foreign reserves," Jayatissa said

He stated that the administration aimed to limit imports to roughly US$1.2 billion this year and that the imports were required to produce much-needed tax income. Vehicle taxes currently exceed 300 percent. In 2019, the last full year prior to the import restriction being put into effect in March 2020, Sri Lanka spent US$1.4 billion on car imports.

The island government had attempted to lift the prohibition on commercial vehicle imports in August 2023, but importers were unable to secure letters of credit since the country remained in arrears on its international debt. Sri Lanka finally resolved its bankruptcy in December after reaching debt restructuring agreements with both bilateral and private creditors.

Sri Lanka defaulted on its US$46 billion external debt in April 2022 after running out of foreign cash to finance imports, resulting in severe food, fuel, and medicine shortages.