There will not be a surge in commodity prices due to the 100 percent cash margin deposit against importations as claimed by the Opposition and certain segments of the business community, State Minister of Finance and Capital Market Development Ajith Nivard Cabraal told the Sunday Observer yesterday debunked speculation and claims by the Opposition.
He said this is not a new scenario to bring fiscal discipline in the country and added that there had been such drastic measures taken in the past to curtail the outflow of foreign exchange and promote local production.
“The interest rates were double than the current rates during the tenure of the past Government of which some members try to make a hue and cry when they burden the business community and stifled economic growth with short-sighted policies,” Cabraal said adding that the Government will take care of any unforeseen development that may emerge from the new cash margin move.
The Central Bank of Sri Lanka imposed a 100 percent cash margin when opening letters of credit for 623 items last week. The items range from mobile phones, chocolates, cereal and a variety of clothing.
The banking sector regulator decided to impose a 100 percent cash margin deposit against the importation of certain non-essential/ non-urgent nature goods to support the ongoing efforts to preserve the stability of the exchange rate and foreign currency market liquidity, particularly by discouraging excessive imports of a speculative nature.
Accordingly, licensed Commercial Banks are barred from granting advances to customers enabling them to meet the minimum cash margin deposit.
The 623 items through customs codes also include spaghetti, apple juice, wine, oats, soya milk, dairy goods, lipsticks, carpets, coats, anoraks, and electronic goods.