CB introduces further measures to preserve foreign reserve position

The government and the Central Bank yesterday introduced further measures to preserve the foreign currency reserve position of Sri Lanka.

A Central Bank statement said the measures were also introduced to minimize the existing pressure on the exchange rate considering the possible negative impacts to the country’s economy caused by the COVID-19 pandemic.

The Cabinet of Ministers has approved the measures and they have been published in the Extraordinary Gazette No.2169/3 dated April 2, 2020.

The measures mentioned below will be imposed 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 USD 30,000. 

5. 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 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.