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Vehicle imports: Treasury alerts CB over dollar drain
View(s):By Damith Wickremasekara
The Treasury has warned the Central Bank that the enthusiasm shown in the import of vehicles after the ban was lifted could have a negative impact on foreign reserves and urged that precautionary measures be taken.
A senior Treasury official said that in the five months after the restrictions on the import of vehicles were lifted, Letters of Credit to the value of US$ 742 million have been opened, against the proposed target of allowing up to US$ 1 billion.
Accordingly, the Treasury has advised the Central Bank that as the opening of the LCs and imports has been at a rate faster than anticipated, it should closely study the trend of imports and take remedial measures in advance.
The Treasury has pointed out that the outflow of US dollars could have a serious impact on the foreign currency reserves and also on the exchange rates. As a result, there could be an impact on imports of essentials, including fuel.
The longstanding vehicle import ban was lifted in February this year, and so far more than 18,000 vehicles have been brought into the country, while import levies have earned a tax revenue of Rs 220 billion, Customs Spokesman Seevali Arukgoda told the Sunday Times.
The revenue from vehicle imports has made a significant contribution to the taxes in the form of customs levies amounting to Rs one trillion so far for the year. The Customs revenue target for this year is Rs 2.1 trillion.
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