Colombo, Nov 19 (PTI) The European Union on Thursday urged Sri Lanka to end its import restrictions put in place as a response to economic hardships caused by the COVID-10 pandemic, saying the current curbs are having a negative impact on the businesses.
In April, the Lankan government stopped imports in the wake of the COVID-19 pandemic, which it said would be restricted to essentials. This was being widely seen as easing the pressure on the local rupee to prevent it from sliding against the US dollar.
In a statement on Thursday, the EU said it had bought more than a billion Euros worth of goods (220 billion rupees) from Sri Lanka than it bought 2018 and 2019 creating a so-called trade surplus in favour of the island nation.
'Trade, however, is not a one-way street. The current import restrictions are having a negative impact on Sri Lankan and European businesses, and on Foreign Direct Investment,” it said in a statement issued by the EU Colombo office.
'Such measures impair Sri Lanka’s efforts to become a regional hub and negatively impact Sri Lankan exports by constraining the import of raw material and machinery. We recall that a prolonged import ban is not in line with World Trade Organisation regulations,' it added.
The call came after the Lankan government presented its 2021 budget, maintaining that import restrictions must remain in place to stabilize the rupee.
The local currency had depreciated by over 9 per cent by early April against the dollar. It recorded 196.75 to the dollar and now remains stabilized around 185 levels which the government mainly attributed to the banning of vehicle imports.
Prime Minister Mahinda Rajapaksa, who is also the Finance Minister, presented the budget on Tuesday amid unprecedented health measures as the island nation since early October is witnessing a massive spike in COVID-19 infections.
Presenting the annual budget, Rajapaksa said the expected economic growth rate for 2021 is 5.5 per cent.
The GDP growth had reduced to 1.6 per cent year-on-year in the first quarter of 2020, following a 2 per cent growth in the last quarter of 2019, the Central Bank had previously announced. PTI CORR ZH ZH