Central Bank wants to burst ‘artificial’ price bubble in the automotive market

By Sanath Nanayakkare

Vehicle prices in Sri Lanka had reached an artificially high level creating a ‘price bubble’ as a result of import restrictions, Central Bank Governor Ajith Nivard Cabraal told Hiru TV recently.

“The lack of foreign currency has compelled us to take this decision. But I know that this is not an acceptable trend. We need to bring these bloated prices down. For this, we need to find a different methodology to import vehicles and sell them at the right price. By the end of

By December this year, there will be more clarity in the macroeconomic outlook and then we can think of an alternative way to import vehicles systematically without putting our foreign reserves under pressure,” he said.

When asked whether it could be said that vehicle imports would be allowed with certain restrictions and conditions from January 2022, the Governor said “Vehicle imports should be allowed soon. We have a problem doing that right away. So, I can’t give a timeline, but with the Central Bank’s six-month Road Map ensuring macroeconomic and financial system stability and the foreign exchange market easing in the next few months, we should be able to allow vehicle imports on a careful and staggered basis,” he said.