IMF says vehicle curbs did not derail EFF program as imports top $ 1 b YTD May

Wednesday, 1 July 2026 00:20 - - {{hitsCtrl.values.hits}}

IMF Executive Board accepted move after Govt. confirmed it was temporary measure
Clarification comes as vehicle import bill increases 20% MoM to $ 250 m in May

The International Monetary Fund (IMF) yesterday clarified that Sri Lanka’s temporary tightening of vehicle import financing requirements did not derail its Extended Fund Facility (EFF) program, as the Central Bank reported motor vehicle imports had exceeded $ 1 billion during the first five months of 2026.

Speaking at a media briefing, IMF Mission Chief for Sri Lanka Evan Papageorgiou said the temporary measure triggered one of the program’s continuous performance criteria on import restrictions after it tightened import financing requirements for vehicles.

The IMF’s clarification came as the Central Bank yesterday reported that expenditure on motor vehicle imports, including personal and commercial vehicles, rose 20% month-on-month to $ 250 million in May, bringing cumulative spending on vehicle imports to $ 1.071 billion during January to May 2026.

He said the issue was discussed with the authorities and subsequently presented to the IMF Executive Board during the combined Fifth and Sixth Review of the EFF arrangement. The authorities had explained that the measure was temporary, introduced to contain the sharp increase in vehicle imports following the reopening of imports, and would be reversed within the announced timeframe.

“The Board was convinced that this was meant to be temporary,” Papageorgiou said, adding that the authorities had also outlined corrective actions to address the deviation. He said the temporary nature of the measure and the planned corrective action were taken into account by the Executive Board in assessing program performance.

Effective 25 May, the Central Bank reduced the maximum loan-to-value (LTV) ratios on motor cars, SUVs, vans and three-wheelers to 40% from 50%, while the ceiling for commercial vehicles was lowered to 60% from 70%, requiring buyers to make larger upfront cash contributions.

The Government also imposed a temporary 50% surcharge on the existing 30% Customs Import Duty on imported vehicles, raising acquisition costs through higher duties and their cascading effect on other import-related taxes.