Sri Lanka eases vehicle import ban, but can people afford a new car?

BBC:

Sri Lanka is set to relax a ban on some vehicle imports in a sign the country is returning to normal after a severe economic crisis that toppled a president.

From 1 February, imports of buses, trucks and utility vehicles will be allowed to resume, while restrictions on other vehicles are expected to be gradually lifted.

Many Sri Lankans are waiting for authorities to also drop an import ban on private cars, sport utility vehicles and three-wheeled trishaws – which are commonly used as taxis.

But with prices of vehicles forced up by a scarcity of new ones to buy, a weak currency and high taxes, some are asking who will be able to afford a new car.

In 2022, Sri Lanka faced a severe foreign currency shortage, which meant it was unable to meet its obligations to creditors for the first time in its history.

The island nation of 22 million people was thrown into turmoil as it faced crippling shortages of fuel, food and medicines.

Massive anti-government protests toppled then-President Gotabaya Rajapaksa just months later.

Colombo negotiated a $2.9bn (£2.3bn) bailout from the International Monetary Fund, while Rajapaksa’s successor introduced austerity measures including hiking taxes and ending energy subsidies.

The country’s finances have since improved and the economy is gradually returning from the brink.

The announcement to lift the import ban on vehicles has triggered a buzz among Sri Lankans who have been waiting for years to buy a new car or a van.

Murtaza Jafeerjee, chair of Advocata, an economic think tank based in Colombo, told the BBC he thought the move was long overdue.

“The vehicle imports will not only increase the government’s revenue but will also trigger other economic activities like car financing, dealer revenue, car servicing and other related activities, creating jobs,” he said.

But Nalinda Jayatissa, the country’s information minister told a media briefing on Tuesday that the country was “moving very cautiously because we don’t want a surge of imports that will deplete our foreign reserves”.