- March 2021 import expenditure hit 3-year high
Import restrictions announced to protect the foreign reserves of the country in early last year would continue to be implemented regardless of the import expenditure of the country for the month of March 2021, hitting a three-year high even amidst “import controls”.
Speaking to The Morning Business, Minister of Trade Bandula Gunawardana responded to the inquiry on the sky-rocketing expenditure on merchandise imports regardless of the continuation of import restriction measures. He said that numerous raw materials happened to be imported in the process of manufacturing exports and this is one of the reasons for the increase in the merchandise imports.
Despite the reduction of traditional exports, the non-traditional imports due to the prevailing pandemic i.e. the demand for masks, sanitisers, medicine have gone up, he explained.
Also, the cost, insurance, and freight (CIF) value hiked abundantly, the Minister said. Due to the pandemic, the freight per container that used to be $ 400, is now $ 1,200.
The Minister confirmed that the import control measures will be in place in order to mitigate the foreign exchange crisis. “We don’t have enough foreign exchange,” said Gunawardana, highlighting that tourism is being halted and the demand for certain export goods has declined. For example, gem and jewellery are such export goods. He noted that this pandemic is a temporary situation, however, tourism earnings depend on the recovery of foreign countries and Sri Lanka from the prevailing situation.
According to the external sector performance for the month of March 2021 issued by the Economic Research Department of the Central Bank of Sri Lanka (CBSL), it is said that the import merchandise expenditure is significantly high – $ 1.9 billion, which was “the highest monthly import value since March 2018”.
Also, in comparison, expenditure on imported merchandise for the year 2020 of the same month is at $ 1.2 billion and for the month of February of the year 2021 it was $ 1.5 billion.
The expenditure in the consumer goods category, other food and beverages, and sugar and confectionery have risen considerably. The expenditure on other foods and beverages has risen to the extent of $ 13.3 million, which is an increase of 129.5%. At the same time, the sugar and confectionary expenditure has risen to $ 50.8 million from $ 27.2 million of the last year in the same month.
The Trade Minister said the rise in the expenditure of sugar and confectionery is due to the reduction of the duty fee. He further said the duty fee remained at about Rs. 30 per kg and now it has been reduced to 25 cents per kg. Thus, this resulted in the importation of sugar increasing noticeably. Gunawardana further noted that the Government has halted sugar imports temporarily for the coming two months.
However, the expenditure on medical and pharmaceuticals in the non-food consumer category of the merchandise has risen to $ 57.7 million, which is an increase of a mere 68%. Also, in comparison to March last year, it is an increase of $ 23.3 million.