🚗 Vehicle Surcharge Fails to Dent Demand; CBSL Sells $211M to Defend Rupee

Sri Lanka Customs reports that vehicle imports remain resilient despite May’s 50% temporary surcharge, while the Central Bank (CBSL) stepped up dollar sales to manage exchange rate pressures. Customs Revenue Breakdown • Vehicle imports continue to drive around 30% of total Customs revenue, aligning with last year’s 30%-35% contribution. • While import volumes dipped slightly, a depreciating Rupee boosted rupee-denominated tax collections, offsetting any volume decline. • Monthly vehicle tax contributions in 2026: - Jan: Rs. 91 Bn (Total: Rs. 235 Bn) - Feb: Rs. 75 Bn (Total: Rs. 215 Bn) - Mar: Rs. 77 Bn (Total: Rs. 231.9 Bn) - Apr: Rs. 84 Bn (Total: Rs. 242.9 Bn) - May (as of 28th): Rs. 76 Bn (Total: Rs. 212 Bn) Forex Pressures & CBSL Intervention • Global supply shocks from the Middle East war pushed the Rupee to a four-year low, forcing CBSL to be a net seller of foreign exchange for the second consecutive month. • In May, CBSL purchased US$ 12 Mn and sold US$ 223.3 Mn, resulting in net dollar sales of US$ 211.3 Mn (up from net sales of US$ 13 Mn in April). • Despite May outflows, CBSL remains a net purchaser of US$ 485.9 Mn for the first five months of 2026. Reserves Status • Gross official reserves grew by 1.7% MoM to US$ 6.87 Bn at end-May (up from US$ 6.76 Bn in April), supported by external foreign inflows despite CBSL's market interventions.