Rice import restrictions continue

State Finance Minister Ranjith Siyambalapitiya said in an EconomyNext report that the Sri Lanka government has not allowed rice imports and has not granted anyone permission to buy the staple food outside the country for public consumption.

Sri Lanka imports staple food from time to time when there is scarcity or when traders stubbornly maintain high prices at the retail level.

President Ranil Wickremesinghe’s government reduced the import tax on rice from 65 rupees per kilo to 1 rupee in January this year to encourage the import of some rice and control high domestic prices.

The move came after millers and collectors drove the price due to a lack of free trade.

However, Siyambalapitiya said no permission has been given for the import of rice and only the required quantity of Basmati rice has been given for the needs of tourist hotels.

“… the minister mentioned that the government allowed importing rice when there was a risk of rice shortage last February,” the Finance Ministry said in a statement quoting the minister at an event.

“At that time, a quantity of rice was brought a few days later and stuck in the port. So, the minister mentioned that although he was given a week to release that quantity of rice, that time has now expired.”

The government’s import tax reduction on rice was effective only through Jan. 21, 2024.

Sri Lanka controls the import of rice to keep domestic prices artificially high.

The majority of Sri Lankans do not like value-added taxes. However, most of them do not bother about taxes imposed on basic food for economic nationalism.

There are also economic nationalism taxes and import duties on maize, which push up animal feed prices, chicken, egg, and dairy products, citing that those taxes will protect domestic producers.

However, analysts say producers at the farm gate never benefit from higher prices paid by consumers due to multiple layers of intermediaries.