CB extends exchange controls by another six months

• Says the extension is aimed at preserving foreign reserves and minimize negative impacts from COVID-19 to economy

The Central Bank yesterday extended the current exchange controls by another six months from January 2, 2021.These restrictions were first imposed in April 2020 and gazetted in June.

The Central Bank said the extension was aimed at preserving the country’s foreign currency reserve position and to minimize the negative impacts from COVID-19 to the country’s economy.  Sri Lanka has also imposed restrictions on non-essential imports. Following restrictions on outward remittances on capital transactions will be effective till July 1, 2021.  

 1. Suspension of 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 foreign currency loans obtained by the investor from a person resident outside Sri Lanka under the provisions of the Foreign Exchange Act, 

b. an additional investment to be made to fulfill the regulatory requirement in the investee’s country applicable on the investment already made in a company or a branch office in that country, 

c. an additional investment/infusion of funds to be made by eligible resident companies in already established subsidiaries or branch offices in overseas up to a maximum of US$ 20,000, for the purpose of working capital requirements of the investee, 

d. the remittances up to a maximum of US$ 20,000, for the purpose of maintenance of liaison, marketing, agency, project, representative or any other similar offices already established in overseas.

2. Suspension of the outward remittances through Business Foreign Currency Accounts (BFCAs) or Personal Foreign Currency Accounts (PFCAs) held by persons resident in Sri Lanka, other than for the remittances on current transactions up to any amount or capital transactions up to a maximum of US$ 20,000.

3. Limitation of 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. 

4. Limitation of the repatriation of funds under the migration allowance by the emigrants who have already claimed migration allowance up to a maximum of US$20,000.  

5. Limitation of 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 in 1.a and 1.b above.

The Central Bank said the above restrictions are only applicable to the identified capital transactions and do not impose any restrictions on already permitted current transactions.