Cabinet approval given to measures to protect reserves

• CB, Finance Ministry tep up efforts, gazette gets Cabinet nod
• New measures also limit CB discretion to approve investments
• Restrictions to remain in place for three months

With the view of preserving the foreign currency reserve position of the country, minimising the existing pressure on the exchange rate and considering the possible negative impact to the  economy due to the outbreak of the COVID-19 pandemic, the Cabinet has approved an order imposing measures on outward remittances on Capital Transactions for a period of three months.

The order was gazetted by the Finance, Economic and Policy Developments Ministry, on the recommendation of the Monetary Board of the Central Bank of Sri Lanka (CBSL) and the approval of the Cabinet of Ministers, a statement issued by the Central Bank said.

Under this order, it was decided to 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 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 investments to be made to fulfil the regulatory requirement in that country.

The order also suspends 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, as well as the repatriation of funds under the migration allowance through Capital Transactions Rupee Accounts (CTRAs) by the emigrants who have already claimed migration allowance. The order also limits the eligible migration allowance for the emigrants who are claiming the migration allowance for the first time up to a maximum of $ 30,000.

The latest measures also limit the authority of the Monetary Board of the Central Bank of Sri Lanka to grant special permission for investments on case by case basis, which exceeds the limits specified in the general permission, only to those satisfying the criteria mentioned 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),” the statement added.