Import restrictions harmful for Sri Lanka, experts warn

COLOMBO (News1st): Sri Lanka's import restrictions can affect its economy in the long run, experts have warned, urging for stronger policies to overcome the country's economic setback. The government, in May, slapped import restrictions on more than 200 products to control outflows as tax revenue, foreign remittances, and tourist arrivals took a beating amidst the coronavirus pandemic. "...we might have to experience many dangerous effects because our dependency on imports is high," Priyanga Dunusinghe, a professor at the Colombo University said. Sri Lanka's imports stood at 994 million US dollars in May despite the restrictions, central bank figures show, higher than exports which generated 587 million US dollars. The restrictions do not encourage local production of those items as the government has cited the move as a temporary economic revival measure, another expert pointed out. "Businessmen will not be drawn to it because it is temporary. The policies of the government must be stronger," Dr Aminda Methsila Perera, a lecturer at the Wayamba University said. Government revenue for the first quarter of 2020 declined to Rs 476.7 billion from Rs 598.1 billion received during last year's first quarter as taxes were slashed after last year's presidential poll. State expenditure during the first quarter, however, stood at Rs 820.7 billion, nearly twice the revenue earned during this period. Economic woes worsened as foreign remittances that were recorded at Rs 2.1 billion US dollars during last year's first quarter, dropped to Rs 1.9 billion US dollars during the same period in 2020. Tourist arrivals that generate potential income to the country, stood at 507,311 during the first three months of 2020 before airports were shut, dropping by approximately 50 percent compared to last year. The country's outstanding debt topped Rs 13 trillion as the Sri Lanka Rupee hovered around Rs 188 against the US dollar compared to the Rs 175 range recorded last year. Foreign reserves that stood at 6.6 billion US dollars declined to 6.2 billion by the end of June, while gold reserves declined from 954.9 million US dollars to 383.6 million during the same phase. The island-nation is looking at a paltry growth rate of 1.5 percent by the end of 2020.