Govt. says effort to reduce impact on reserves
Bandula confident if more forex flows into rupee, it could appreciate to Rs.185
The Finance Ministry has gazetted a list of import items that will be temporarily suspended as the Government battles to reduce pressure on reserves and keep the currency from depreciating too steeply.
The extensive list of items was gazetted by Prime Minister Mahinda Rajapaksa in his capacity as Finance, Economic and Policy Development Minister. It includes a list that has temporary import suspensions and a second list where letters of credit forwarded by banks can only be applicable for three months, or till 15 July.
Multiple types of fish, rice, cereals, coconut products, chocolate, beer, pasta, tapioca, bread, mineral water, wine and other types of alcohol are among the items in the suspended list. Marble, granite, paint, types of iron and plastic, sanitary ware, and wood needed for the construction industry have also been inducted in the list. Items such as essential oils, beauty products, tableware, and a wide range of garments have also been listed.
“If any items that are important for exporters have been included in the list, then an appeal can be made to the Treasury Secretary to import that product. This step has been taken by the Government to reduce pressure on reserves along with several other measures, including allowing for special deposit accounts to be opened for remittances that are released from foreign exchange regulations,” Cabinet spokesman Bandula Gunawardena said at a press conference held at the Government Information Department yesterday.
He stressed that the restrictions on imports would strengthen local industries who could also avail themselves of low interest loans to expand businesses and produce more import substitution goods. “If we manage to reduce imports and attract more money into the country, then we could even see the rupee appreciate from the current Rs. 195 to Rs.185. This would be a positive development for every citizen and that is why the Government has imposed these regulations,” he added.
(FT)