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Monday, 1 October 2018 01:37 - - {{hitsCtrl.values.hits}}
The Government on Saturday announced temporary yet sweeping measures to curb the outflow of foreign exchange and stem the fall of the rupee.
It said the issuance of vehicle permits to Members of Parliament would be suspended for a period of one year.
The importation of vehicles for government ministries, departments, statutory boards and State-owned Enterprises will be suspended until further notice.
The importation of vehicles using the concessionary permits issued to entitled State sector employees will be suspended for six months. No Letters of Credits will be permitted to be opened based on these permits during this period.
The Loan to Value Ratio (LTV) for Hybrid vehicles will be revised from 70:30 to 50:50 basis. Importers of all vehicles other than buses, lorries and ambulances will have to keep a 200% cash margin at the time of the opening of LCs.
Further, the requirement of a 100% cash margin has been imposed for the import of refrigerators, air conditioners, televisions, perfumes, telephones including mobile phones, washing machines, footwear and tyres.
“However, though these measures will be effective temporarily from 29 Saturday 2018, the Government will continuously monitor the exchange rate fluctuations and will take appropriate action accordingly,” the Finance Ministry said in a statement. The rupee has weakened 4.7% in September against the dollar after a 1.2% drop in the previous month and has declined 10.2% so far this year.
The rupee on Friday recovered to close firmer on Central Bank intervention after the currency touched its record low hit during the previous session. The rupee ended at 169.15/30 per dollar, compared with the previous close of 169.35/55.
On Thursday the rupee touched its all-time low of 169.40 per dollar on importer demand for the greenback and foreign selling in government securities, but intervention by the Central Bank helped the currency close firmer, according to Reuters.
Last week the Central Bank imposed a new measure requiring vehicle importers to deposit the full value of the cars they intend to import via Letters of the Credit from banks, instead of the current practice of depositing only a proportion.
Reuters, quoting Central Bank data, said vehicle imports soared 119.5% to $ 812.7 million in the first six months of this year while fuel imports rose 28.9% from the same period last year to $ 2.1 billion.
In August, Sri Lanka raised the import duties on small hybrid cars by more than 50%, aiming to boost state revenue and curb the fall in the rupee.
