Further measures to restrict Forex outflow | Daily News


 

Further measures to restrict Forex outflow

Payments via Outward Investment Accounts for Overseas Investments suspended
Monetary Board empowered to decide on case by case basis
Migration allowance limited to US$ 30,000

Prime Minister Mahinda Rajapaksa, who is also Finance Minister,  has issued an Extraordinary Gazette suspending Sri Lankan Citizens from making payments through Outward Investment Accounts for overseas investments for three months.

This order was made under the Section 22 of the Foreign Exchange Act Number 12 of 2017.

However, certain exclusions will apply: 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 fulfill regulatory requirements of that country.

The new regulations will also suspend any outward remittances other than on current transactions through Business Foreign Currency Accounts or Personal Foreign Currency Accounts held by persons resident in Sri Lanka.

The new regulations will also suspend the repatriation of funds under the migration allowance through Capital Transaction Rupee Accounts by migrants who have already claimed the migration allowance under the general permission granted by exchange control regulations.

First time migrants will be allowed a migration allowance only up to US$ 30,000.

However, the Monetary Board shall have the authority to grant permission under the Exchange Control Act for investments on a case by case basis which exceed the specified limits. However, these should 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 the proposed investment is to be made to fulfill a regulatory requirement of that country. This will be in effect for a period of three months from April 2, 2020.

These are among the measures adopted by the Government to prevent the unnecessary outflow of foreign exchange at a time when all developed and developing economies including that of Sri Lanka have been battered by the COVID-19 pandemic.  The Government has also urged importers to suspend the imports of all non-essential and luxury goods including vehicles for an initial period of three months from April this year. Imports of essential items will continue uninterrupted.  


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