Sri Lanka slaps limits on non-essential imports to curb credit growth

Senarath Bandara - Managing Director /CEO, Cargills Bank, Ranjit Page - Deputy Chairman / Group CEO, Cargills (Ceylon) PLC, D Kumaratunge - Assistant Governor, Central bank Of Sri Lanka, Ajith Nivard Cabraal – Governor, Central Bank of Sri Lanka, Yohan Samuel - Delivery Agent, Cargills Online, Sanjeewa Premawaradana - General Manger / IT, Cargills (Ceylon) PLC, Asanka Mahanama – Senior Manager - IT, Cargills (Ceylon) PLC, Roshan Dilruk – Operations Manager, Cargills Online

October 20, 2006 (LBO) – Sri Lanka has imposed fresh restrictions to limit imports of 44 non-essential items like electrical goods, chocolates, palm oil and cosmetics, in a bid to curb excessive credit growth. “A 50 percent margin deposit on the invoiced value of the imports should be placed by the importers at the time the bank releases the documents,” the Central Bank’s exchange control department said.

The 50 percent margin requirement is on the total value of the invoice, even if the same invoice includes items which are not subject to the margin requirement.

“It is observed that a considerable volume of consumer items are imported through Documents against Acceptance (DA) terms and there is a distinct possibility that foreign exchange payments for such imports are remitted to suppliers abroad without routing them through the banking system,” Controller of Exchange, D Wasantha explained.

Under the ruling importers are not allowed to get credit from banks to meet the margin requirements.

“Margin deposits will be subject to the statutory reserve requirements. The banks may pay interest on the 50 percent margin deposits,” Wasantha said. The ruling exempts import shipments made on or befor

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