Sri Lanka Relaxes Exchange Controls from March 11 in the First Phase of Foreign Exchange Liberalization Plan

10th March 2010, www.news.lk

Sri Lanka has relaxed several exchange controls relating to opening bank accounts abroad, forward foreign exchange cover and imports margin deposits and pre-payments from 11th March, in the first phase of a foreign exchange liberalization plan announced earlier in the year.

Central Bank Governor Ajith Nivard Cabraal said this is the first in the series of relaxations, and other controls will be relaxed in phases. Exporters, persons earning foreign exchange abroad from approved investments, people providing professional services abroad,people doing any job abroad and people who go abroad for education or medical treatment have been allowed to open bank accounts.

Forward foreign exchange cover has been allowed for remittances,approved foreign lending and borrowings as well as trade in goods and services. A 100 percent margin requirement against advanced payments for imports will be removed and importers will be allowed to pre-pay. Several different types of investment accounts for inward investments for shares and bonds will be unified into one account.

The central bank said in its monetary policy roadmap in January that over the year 2010, a series of foreign exchange controls would be relaxed. Sri Lankan residents would be allowed to invest abroad up to a specified limit, and foreigners would be allowed to buy corporate bonds. Foreigners, including tourists would be allowed to open bank accounts in Sri Lanka.