Crisis-stricken Sri Lanka slaps import ban on a wide range of consumer goods with immediate effect
Facing chaos in the economy, the Sri Lankan government has slapped a ban on the import of 300 consumer items like chocolates, perfumes, and shampoos until further notice. This was to tackle its worst economic crisis triggered by the acute shortage of foreign exchange. Meanwhile, the IMF delegation and President Ranil Wickremesinghe on Wednesday began crucial talks to finalize a bailout package and secure a staff-level agreement.
Sri Lanka is going through its worst economic crisis since its independence in 1948. In a special notification issued by the Sri Lankan Finance Ministry, the ban was imposed on a total of 300 items including chocolates, perfumes, wristwatches, telephones, pressure cookers, air conditioners, musical instruments, alcoholics, and non-alcoholic beverages among several other products.
“Under imports and exports control regulations dated August 22 an import ban on a wide range of consumer items from food to machinery has come into immediate effect,” the notification said. President Ranil Wickremesinghe, in his capacity as the Finance, Economic Stabilization, and National Policies Minister, issued new regulations via an extraordinary gazette suspending the import of a plethora of items, with effect from August 23, 2022, until further notice. However, these items if shipped before August 23 and arrive in the country before September 14 would still be allowed, it stated.
The country’s foreign exchange reserves plummeted to record lows from mid-April, with dollars running out to pay for essential imports including food, medicine, and fuel — leaving millions of people unable to feed their families, fuel their cars, or access basic medicine.
The second such visit from the International Monetary Fund (IMF) in three months comes at a time when Sri Lanka is scrambling to chalk out a staff-level agreement with the Washington-based global lender for a USD 5 billion program, which could be the antidote for the country’s current economic travails. The IMF delegation will be in Colombo till August 31.
IMF’s Resident Representative for Sri Lanka, Tubagus Feridhanusetyawan, and Finance Secretary Mahinda Siriwardana took part in the talks, media reports said. “The first round of talks commenced today, during which the IMF delegation analyzed the country’s current economic crisis,” the President’s office said in a statement.
The IMF team is led by Peter Breuer and Masahiro Nozaki, the Washington-based lender announced last week. According to officials, the second round of talks will commence on August 26, during which the delegation will hold technical-level talks with Sri Lanka’s Central Bank Governor Nandalal Weerasinghe.
In mid-April, Sri Lanka declared its international debt default due to the forex crisis. The country owes USD 51 billion in foreign debt, of which USD 28 billion must be paid by 2027. The government’s statistics office said on Monday that the overall rate of inflation as measured by the National Consumer Price Index on a year-on-year basis had gone up to 66.7 percent in July over the 58.9 recorded in June.
In its latest assessment, the World Bank has said that Sri Lanka has been ranked 5th with the highest food price inflation in the world. Sri Lanka is ranked behind Zimbabwe, Venezuela, and Turkey, while Lebanon leads the list.
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