Amid ongoing pressure on foreign exchange reserves and continued currency depreciation linked to developments in West Asia, Sri Lanka has introduced new measures targeting vehicle imports, including a 50% surcharge on customs duties imposed on 16th May to discourage imports and ease currency pressure.

The decision comes amid a sharp depreciation of the local rupee since the beginning of US and Israeli attacks on Iran, which prompted retaliation from Tehran. Official figures indicate that the rupee has declined by 4.5% against the US dollar so far in 2026.

Junior Finance Minister Anil Jayantha Fernando stated that the government intends to temporarily slow vehicle imports. "Given the current pressure on foreign exchange, the objective is to delay vehicle imports by three months," he told reporters in Colombo.

Vehicles were previously subject to a 30% customs duty; however, multiple additional taxes result in an effective import tax exceeding 100%.

The country has also increased energy prices by more than one-third since the start of the West Asia conflict and has introduced rationing of diesel and petrol to reduce the import bill.

Central Bank Governor Nandalal Weerasinghe informed a parliamentary panel that the rupee is expected to continue weakening unless global oil prices decline or Sri Lanka reduces energy imports.

Sri Lanka is still recovering from its economic crisis in 2022, when it faced a severe shortage of foreign exchange, which affected its ability to finance essential imports such as food, fuel and medicine. Since then, the country has been operating under a US$ 2.9 billion International Monetary Fund bailout programme.