Sri Lanka has lifted import restrictions on nearly 300 items with immediate effect, the Finance Ministry announced on Saturday, in a clear sign that the island nation is slowly but surely emerging from its worst economic crisis in decades.
Last year, Sri Lanka plunged into its worst economic crisis since its independence in 1948 due to plummeting foreign exchange reserves that caused severe shortages of essential items and triggered massive public protests.
In April 2022, Sri Lanka declared its international debt default due to the forex crisis.
Sri Lanka’s economic situation has improved after it secured a $3 billion bailout package from the International Monetary Fund (IMF) in March.
The IMF lifeline helped Sri Lanka bolster its foreign exchange reserves and stabilise the spiralling inflation.
“With the economy stabilising, import restrictions on 286 items have been lifted from Friday midnight,” the Finance Ministry said in a statement.
“Restrictions on 928 items will continue, including vehicle imports, which were banned in March 2020,” the statement said.
“Imported goods can help moderate prices by providing consumers with options and lower cost alternatives,” Shehan Semasinghe, the Minister of State for Finance, said.
In August last year, Sri Lanka slapped a ban on the import of 300 consumer items like chocolates, perfumes, and shampoos to tackle its economic woes.
Sri Lanka’s reserves grew by an impressive 26 per cent to touch $722 million in May, while the currency also rose by 24 per cent this year, according to central bank data.
The positive signs notwithstanding, Sri Lanka’s path to complete economic recovery is still arduous.
The country needs to complete debt restructuring talks with its creditors, notably China, India, and Japan, and implement key economic reforms by ahead of the first IMF review in September.
The IMF bailout, the 17th in Sri Lanka’s history, called for hard economic reforms such as tax hikes, utility rate hikes and divesting loss-making state business enterprises, which have been met with stiff political opposition.
India has extended multi-pronged assistance to Sri Lanka during the peak of its economic and humanitarian crisis in line with its "Neighbourhood First" policy and as an earnest friend and partner of Sri Lanka.
New Delhi has extended lines of credit worth over $4 billion to Colombo in diverse sectors including the supply of essential items, petroleum, fertilisers, development of railways, infrastructure, defence sector and renewable energy, according to the Indian High Commission here.
Sri Lanka's unprecedented financial crisis in 2022 also sparked a political turmoil in the country, leading to the ouster of the all-powerful Rajapaksa family.