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Sri Lankan Central Bank’s decision to raise import taxes on non-essential items has helped in bringing about a drastic drop in trade deficit of the island nation.
Trade deficit of the country saw a decline by over 33 per cent in July, the lowest for 17 months, Central Bank said today.
This was as a result of the central bank’s corrective economic measures adopted earlier in the year.
In April, the bank took action to curtail credit growth and expenditure on imports by raising the import taxes on motor vehicle and non-essential items.
The measures were taken as expenditure on imports had contributed significantly to the credit expansion last year.
“Expenditure on imports of motor vehicles has declined by 62. 4 per cent year on year in July,” a statement said.
The trade deficit decline is also attributed to increase in foreign currency inflows into Sri Lanka during the first seven months of 2012.
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