The Finance Ministry remains uncertain on the expected foreign exchange outflow following the relaxation of vehicle import restrictions and its potential impact on Sri Lanka’s foreign exchange reserves.

Stating that he had seen news reports to the effect that the Government had decided to relax vehicle import restrictions, Deputy Secretary to the Treasury Priyantha Rathnayake however said that he did not have any other information in this regard.

“I don’t know how it will affect forex because I don’t have any estimates on the order list,” he told The Sunday Morning.

However, he noted that a new tax structure would be imposed.

When asked how the new structure would affect luxury and fuel-efficient vehicles, Rathnayake said: “Unfortunately, I don’t have details on the tax structure either.”

He also suggested reaching out to Fiscal Policy Department Director General Kapila Senanayake for more information. However, attempts to contact Senanayake proved futile.

Meanwhile, speaking to The Sunday Morning, a high-ranking official attached to the Ministry of Finance who wished to remain anonymous disclosed that while they could not provide an exact figure, the Government expected to generate around 0.08% of GDP in tax revenue following the relaxation of vehicle import restrictions.

Regarding the foreign exchange outflow, the official said: “It depends on the number of imports.” 

When asked about potential measures in the event of a significant drain on forex reserves, the official stated: “A Cabinet decision has been made not to open imports all at once. It will be phased in based on the recommendation of the Ministry of Finance, so we have time.”

Meanwhile, State Minister of Finance Shehan Semasinghe declared that the Cabinet of Ministers had approved the importation of vehicles in several stages starting from 1 October.

According to the State Minister, restrictions on importing public transport vehicles will be removed from 1 October while the restrictions on importing commercial and goods transport vehicles will be lifted from 1 December. 

He added that the restrictions on importing other passenger vehicles, including cars, were to be removed from 1 February 2025.

According to Foreign Minister Ali Sabry, following the advancement in forex reserves and the strengthening of the rupee, the Cabinet has decided to lift all vehicle import restrictions by February 2025. 

“This decision is part of our ongoing efforts to restore normalcy in the economy and meet the needs of our people,” the Minister posted on X.

The Government suspended vehicle imports in 2021 due to the economic crisis triggered by the Covid-19 pandemic. However, in June, the Ministry of Finance said it would gradually lift the restrictions by 2025.