The Central Bank of Sri Lanka has restricted outward remittances on capital transactions by individuals and companies for three months to preserve foreign exchange reserves, excluding overseas investments financed through foreign currency loans and investments to meet regulatory requirements in another country.
A statement from the Department of Foreign Exchange said the new measures would help minimize pressure on the exchange rate and take into account the possible negative impact to the Sri Lankan economy from the outbreak of Covid-19.
"The restrictions are only applicable to the identified capital transactions and do not impose any restrictions on already permitted current transactions," it said.
The new measures suspend the general permission granted to make outward remittances for investments overseas through the Outward Investment Accounts (OIA) by persons resident in Sri Lanka.
The OIA is a special account designated for persons resident in Sri Lanka to channel funds abroad for eligible overseas investments such as investment in shares, units, debt securities, sovereign bonds and establishing an overseas company of a company incorporated in Sri Lanka.
The restrictions under OIAs exclude investments to be financed out of a foreign currency loan obtained by the investor from abroad and investments to be made to fulfil the regulatory requirement in another country.
The new measures also 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.
Also suspended is the repatriation of funds under the migration allowance through Capital Transactions Rupee Accounts (CTRAs) by the emigrants who have already claimed the migration allowance.
The new measures limit the eligible migration allowance for emigrants who are claiming the migration allowance for the first time up to a maximum of USD 30,000, from USD 200,000 earlier.
They also limit the authority of the Monetary Board of the Central Bank to grant special permission for investments on case by case basis, which exceeds limits specified in the general permission, only to those satisfying the criteria under the Outward Investment Accounts exceptions.
The new measures were introduced by the Minister of Finance, Economic and Policy Developments with the recommendation of the Monetary Board of the Central Bank and the approval of the Cabinet of Ministers.
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