Fuel and vehicle imports expected to ease: CBSL

Vehicle imports slowed in August, and the Central Bank of Sri Lanka (CBSL) expects the trend to continue due to tighter loan-to-value (LTV) rules and a Government surcharge, Governor Dr. Nandalal Weerasinghe said yesterday. LTV rules limit how much of a vehicle’s price can be financed with a loan.

Vehicle imports fell to $ 189 million in August from around $ 240 million, he said. The number of letters of credit opened in recent months, an indicator of future import orders, has declined. “This shows that future imports will be lower than what we see now,” Dr. Weerasinghe said.

CBSL Chief Economist Dr. Lasitha Pathberiya said fuel imports also fell from very high levels in April. Imports excluding fuel and vehicles declined in August as well. Part of this reflects seasonal factors, though imports were still lower year-on-year.

Asked about the three-month extension of the vehicle surcharge, which a reporter said breaches an International Monetary Fund (IMF) continuous performance criterion, Dr. Weerasinghe said the matter was for the Government.

“That’s a decision by the Government. Surcharge, duties and all that, the Government can consider,” he said. He added that the CBSL and the Government consult and coordinate, but the authority rests with the Government.