COLOMBO, 10 April 2020: Sri Lanka’s Central Bank has called upon Sri Lankans overseas to deposit their foreign currency holdings in Sri Lankan banks to help the country tide over the economic situation caused by the COVID-19 pandemic, which has taken a heavy toll on the island nation’s export earners, including tourism, textiles and garments and worker remittances.
In a joint statement, Central Bank Governor, W.D. Lakshman and Secretary to the Treasury S.R. Attygalle appealed to Sri Lankans around the world and those living in Sri Lanka with foreign currency holdings, well-wishers, and charitable organizations to step forward and support the country as a gesture of goodwill by depositing their savings and other funds in foreign currency during the next three months.
“Your foreign currency deposits in Sri Lankan banking system at this difficult stage would be of immense help to authorities to tide over the present crisis,” the statement said.
The government has made assurances that foreign currency remittances would not be met with any regulatory hindrances including exchange control regulations and taxes for three months starting April 2. It has also guaranteed the future convertibility of deposits and protections under banking secrecy provisions.
“Such remittances would go a long way to promote people’s welfare during the current period of still spreading COVID-19, and economic revival in the immediate aftermath,” the statement said.
Sri Lanka’s forex reserves were down by USD 412.5 million to USD 7,525 million by end March 2020 from USD 7,938.24 million US in February, local media reported citing Central Bank data.
As the Rupee depreciated to Rs. 200 against the dollar on Thursday and in a bid to stem the rapid depreciation of the Rupee against foreign currencies, the Government imposed further restrictions on the outflow of foreign currency.
With the view of preserving the foreign currency reserve position of the country, minimizing the existing pressure on the exchange rate and considering the possible negative impact to the Sri Lankan economy due to the outbreak of Covid-19 pandemic, the Minister of Finance, Economic and Policy Developments with the recommendation of the Monetary Board of the Central Bank of Sri Lanka (CB) and the approval of the Cabinet of Ministers has issued an order imposing the following measures on outward remittances on Capital Transactions for a period of three months:1. Suspend the general permission granted to make outward remittances for investments overseas through the Outward Investment Accounts by persons resident in Sri Lanka excluding the following;
a. investments to be financed out of a foreign currency loan obtained by the investor from a person resident outside Sri Lanka under the provisions of the Foreign Exchange Act, or
b. investments to be made to fulfill the regulatory requirement in that country.
2. Suspend the outward remittances through Business Foreign Currency Accounts (BFCAs) or Personal Foreign Currency Accounts (PFCAs) held by persons in, or resident in, Sri Lanka, other than for the remittances on current transactions.
3. Suspend the repatriation of funds under the migration allowance through Capital Transactions Rupee Accounts (CTRAs) by the emigrants who have already claimed migration allowance.
4. Limit the eligible migration allowance for the emigrants who are claiming the migration allowance for the first time up to a maximum of US$ 30,000.
5. Limit the authority of the Monetary Board of the Central Bank of Sri Lanka to grant special permission for investments on a case by case basis, which exceeds the limits specified in the general permission, only to those satisfying the criteria mentioned in 1.a and 1.b above.
The above restrictions are only applicable to the identified capital transactions and do not impose any restrictions on already permitted current transactions. The said order published in the Extraordinary Gazette No. 2169/3 dated 02.04.2020 can be accessed through “Downloads” in the official website of the Department of Foreign Exchange, www.dfe.lk
