$ 1.2 b in LCs opened, vehicle imports lag behind

• Actual arrivals remain far below value of LCs, easing pressure on reserves
• CBSL projects total imports of $ 1.5 b or less for 2025
• Current account surplus expected to continue for 3rd consecutive year

The Government has expressed confidence that vehicle imports to Sri Lanka in 2025 will remain within its new revised target of $ 1.5 billion, noting that actual imports continue to fall well short of the value of Letters of Credit (LCs) opened.

Speaking to The Sunday Morning Business, Deputy Minister of Trade, Commerce, and Food Security R.M. Jayawardana stated that by early August, Sri Lankan banks had opened over $ 1.2 billion worth of LCs to fund vehicle imports to the country, surpassing the previous annual target within just seven months.

Nevertheless, he stated that the Government had revised its target upward, expressing confidence in the country’s capacity to accommodate up to $ 1.5 billion worth of vehicle imports in 2025.

“Our initial target was $ 1,000 million (vehicle imports), and thereafter, it was extended to $ 1,200 million. The President has now revealed that we can accommodate vehicle imports up to $ 1.5 billion,” he added. 

Jayawardana expressed confidence that the new annual target of $ 1.5 billion would be sufficient considering the fact that actual imports continued to fall well short of the value of LCs opened.

“Even though $ 1.2 billion worth of LCs have been opened, we are yet to receive vehicle imports worth even $ 1 billion,” he stated.

In an interview with the Advocata Institute last week, Central Bank of Sri Lanka (CBSL) Assistant Governor Dr. Chandranath Amarasekara revealed that actual vehicle imports until the end of June had been valued at $ 500 million, which was included in the $ 1.2 billion LCs opened so far this year.

Since there is a lag period of 2–4 months after opening LCs for vehicles to arrive in the country, he said: “We believe that vehicle imports this year, according to our latest projections, will be around $ 1.5 billion or less.”

Dr. Amarasekara added that even with vehicle imports to such an extent, Sri Lanka would see a current account surplus this year for the third consecutive year, adding that by 2026, the current account would have a manageable deficit.

Therefore, he noted that we would not witness a major pressure on the current account or our reserve building efforts from the expected $ 1.5 billion worth of vehicle imports in 2025.