IMF reports Sri Lanka’s roadmap to relax motor vehicle import restrictions by 2025

Vehicles including cars parked at Hambantota port in Sri Lanka

(Photo: YouTube)

The International Monetary Fund (IMF) announced today (June 14) that Sri Lankan authorities have formulated an initial roadmap to relax restrictions on motor vehicle imports by 2025.

This strategic plan aims to commence with the importation of public passenger and special purpose vehicles in the third quarter of 2024. Goods transport vehicles will follow in the fourth quarter of the same year, with the remaining categories slated for 2025.

A detailed plan, outlining the implications on tax revenues and reserve accumulations, is expected to be finalized by June 15, 2024. According to the IMF, Sri Lanka anticipates generating approximately 0.8 percent of GDP from the relaxation of these import restrictions.

In addition to the motor vehicle import plan, Sri Lankan authorities have committed to developing a strategy to remove the remaining administrative Balance of Payments (BoP) measures. This includes eliminating exchange restrictions, Multiple Currency Practices (MCP), and capital flow measures (CFMs) by the end of May 2024.

The IMF’s announcement follows the completion of the second review under the 48-month Extended Fund Facility (EFF) arrangement, which allows Sri Lanka to draw SDR 254 million (approximately USD 336 million).

This disbursement brings the total financial support provided by the IMF to SDR 762 million (around USD 1 billion) under the current arrangement.

The IMF’s involvement and the strategic plans by Sri Lankan authorities signal a significant move towards economic stabilization and growth, offering a positive outlook for the country’s financial future.