The much-debated duty-free vehicle permit scheme for senior public sector officials is unlikely to make a comeback in the upcoming national budget, as the government moves cautiously to maintain foreign exchange stability and meet key fiscal targets set under its agreement with the International Monetary Fund (IMF).
According to The Sunday Times, the Treasury has so far withheld the issuance of permits for nearly 23,000 eligible officials, while more officers continue to qualify for the benefit each year. The decision to suspend the scheme, once seen as a significant privilege for senior administrators and professionals, appears to be part of broader measures aimed at reaching the US$7 billion foreign reserve target by the end of this year — a benchmark agreed upon with the IMF.
A senior Treasury official, quoted in the report, confirmed that with only weeks remaining before the presentation of the 2026 Budget, no consideration has been given to reviving the facility. This is despite continued appeals from senior public servants, medical officers, university lecturers, and other professional groups who argue that the permit system served as a non-cash incentive amid salary stagnation and rising living costs.
The decision also comes against the backdrop of a notable surge in vehicle imports. According to data from the Central Bank of Sri Lanka (CBSL), vehicle imports during the first eight months of the year have already cost the country about US$918 million in foreign exchange. The month of August alone accounted for a record US$249 million, the highest monthly figure so far, encompassing both personal and commercial vehicle imports.
Despite this, the government has surpassed its tax revenue expectations from vehicle imports, collecting Rs. 470 billion so far this year against an annual target of Rs. 450 billion. The easing of import restrictions in February led to a spike in vehicle registrations, with 37,115 new vehicles recorded since then.
Treasury sources emphasized that the current approach to vehicle imports remains closely coordinated with the Central Bank to prevent excessive foreign exchange outflows. They noted that although imports have increased, they have not yet exceeded the government’s projected limits, especially considering that the market is recovering from a five-year import ban.
Economic analysts suggest that the government’s decision to continue suspending the duty-free permit system reflects a shift away from symbolic perks toward stricter fiscal discipline. However, they also warn that the move could deepen dissatisfaction within the state sector, where expectations of compensation or incentives remain high ahead of the budget.
As the government works to stabilize reserves and manage the balance between fiscal prudence and public sector morale, the fate of the duty-free permit scheme remains a telling example of the competing priorities in Sri Lanka’s post-crisis economic recovery.
