With the view of preserving the foreign currency reserve position of the country, minimizing the existing pressure on the exchange rate and considering the possible negative impact to the Sri Lankan economy due to the outbreak of Covid-19 pandemic, the Minister of Finance, Economic and Policy Developments with the recommendation of the Monetary Board of the Central Bank of Sri Lanka (CBSL) and the approval of the Cabinet of Ministers has issued an order imposing several measures on outward remittances on Capital Transactions for a period of three (03) months.
This includes the suspending 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.
The second initiative is to 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.
Another measure is to suspend the repatriation of funds under the migration allowance through Capital Transactions Rupee Accounts (CTRAs) by the emigrants who have already claimed migration allowance.
Limiting 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 is another step taken in this regard.
The fifth step is to 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. Department of Foreign Exchange says that these restrictions are only applicable to the identified capital transactions and do not impose any restrictions on already permitted current transactions.
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