(AFP/Reuters)-Sri Lanka on Wednesday tightened restrictions on a wide range of imports from whisky to kitchen appliances as a foreign exchange shortage pushed the economy to the brink of collapse.
An import ban was already introduced in March 2020 on big-ticket items such as cars in an effort by the government to stop the outflow of dollars needed to pay Sri Lanka’s debts.
Under the new regulations, 350 items that the government considers luxuries, including apples, grapes and oranges cannot be freely imported.
Chocolates, cheese and pasta will also not be allowed unless the government grants an exception.
In a gazette notification, the Finance ministry said the limits on imports will come into effect from midnight on Wednesday though valid license holders will still be able to import these items.
The measures came two days after the government devalued the local currency by nearly 15 percent against the US dollar in a desperate bid to attract more dollars through remittances.
Sri Lanka’s worst economic crisis since independence in 1948 has led to fuel and electricity rationing across the South Asian nation of 22 million, and has crippled public transport and caused long queues for food and medicines.
Essentials such as milk powder, sugar, lentils and wheat, as well as medications, are in short supply.
The coronavirus pandemic battered the island’s tourism sector — a key foreign exchange earner — sparking fears the country may not be able to repay its $51 billion foreign debt.
Official data shows Sri Lanka needs nearly $7 billion to service its foreign debt this year, but the country’s foreign currency reserves at the end of February were only $2.02 billion — enough to finance less than one month’s imports.
On Monday, CBSL relaxed the unofficial peg on the rupee to 230 per dollar from around 200 to 203 where it has been held since October.
Sri Lanka’s imports rose by 28.5% to $20.6 billion in 2021 with the largest expenditure of $1.2 billion made on fuel.
Higher global commodity prices and supply issues have pushed Sri Lanka’s inflation to 16.1% in February, among the highest rates in Asia.