Sri Lanka confident ...

Critics blame the Central Bank for raising the rates to skyhigh levels pushing many out of business and scores of others out of jobs while shrinking the economy.

The elevated interest rates helped control credit flows into funding the imports while the weaker rupee against the dollar also discouraged imports as it made the rupee value of foreign made goods more than double in price from where they were before March.

The Central Bank on March 7 floated the rupee without any safeguards to prevent excessive depreciation causing the currency to shed 80 percent of its value against the US dollar.

Based on the most recent merchandise trade data, imports to Sri Lanka fell by 15.8 percent in September to US$ 1,284 million from a year ago and from nearly Rs.2.0 billion a month in January this year, bringing the imports bill into parity with what the country earns from exports and remittances.

However, as Sri Lanka is approaching the year-end festive season when the typical demand sees a spike, it is uncertain if the country’s existing dollar inflows are sufficient to finance what they need for somewhat higher imports during this period.

In another round of easing import controls, the government last week lifted restrictions on 78 items after removing restrictions on 708 items in September.