Import restrictions on non-essential goods removed

By Hiran H.Senewiratne

The government has decided to remove all restrictions imposed by it on the importation of non-essential goods, the Governor of the Central Bank Ajith Nivard Cabraal said.

“The cash deposit restrictions imposed by the Central Bank on the importation of non-essential goods will be removed and importers should take strict responsibility in importing goods after this concession is granted,” Governor Cabraal disclosed while speaking during an event to unveil the CBSL’s ‘Six-Month Road Map for Ensuring Macroeconomic and Financial System Stability’. The event was held at the Atrium of the CBSL yesterday.

Cabraal said the Central Bank on September 8 decided to impose a 100 percent cash margin deposit requirement against the importation of selected goods of non-essential and non-urgent nature made under Letters of Credit and Documents against Acceptance Terms with Licensed Commercial Banks and the National Savings Bank, with immediate effect.

Presenting the road map for the next six months, the Governor said the government will aim to increase Gross Official Reserves to cover a minimum of 4 months of imports by March 2022.

The Central Bank balance sheet will be strengthened with gradual rollback measures and the buildup of external reserves, which now stand at US $ five billion, he said.

Among other objectives are to achieve a stable exchange rate, stable interest rates and Real GDP growth of around 5 percent in 2021 and 6.5 percent in 1Q-2022 and to stabilize inflation at mid-single digits.

Speaking on the Central Bank’s ‘to-do-list’ regarding macroeconomic stability concerns, Cabraal said that they will ensure the maintenance of mid-single digit inflation and ensure stability of interest rates and exchange rates.

He said the CBSL will continue with steps to curb prohibited pyramid schemes and other financial scams and also introduce directions on IT Risk Resilience of Licensed Banks.

Meanwhile, ‘Credit Counseling Centres’ and ‘Investment Advisory Centres’ are to be established at Regional Offices while the Central Bank will facilitate the setting up ‘Equity Funds’ to support stressed businesses and thereby avoid the increase of nonperforming loans (NPLs).

Cabraal further said that the cash margin deposit requirements on non-essential/non-urgent imports will be discontinued with immediate effect.

We will also consider the possibility of buying back the entire Issue of ISBs maturing in January 2022 and/or July 2022, if high discounts are prevalent in the market, he added.