Sri Lanka to Relax Exchange Controls Further for Local Companies, Institutions and Individuals

06th January 2011, www.dailynews.lk, By Charumini De Silva

The Central Bank will implement measures to further relax foreign exchange controls.

These implementations will smoothen the progress of increased levels of reserves and will facilitate stability of the external sector in the long-term, Central Bank Governor Ajith Nivard Cabraal said.

Under this permission will be granted for local companies, institutions and individuals to invest in equity of companies incorporated abroad and sovereign bonds issued by foreign Governments. The Governor said the removal of the maximum limit on the balance of the indirect exporter’s foreign currency accounts and relaxation of exchange control restrictions on investments in Unit Trusts will also be executed during this year.

Permission will be granted to transfer funds in NRFC and RFC accounts among banks and among individuals and introduction of corporate credit cards and travel cards under foreign exchange control measures to be implemented this year.

Restrictions in foreign investments in education, travel agencies and shipping agencies will be relaxed further. Permission will be granted to residents to make payments to non-residents with regard to purchase of real estate.

This will also provide Sri Lankan students studying abroad to obtain loans from banks in the country of study.

The introduction of special foreign currency accounts for travel agents, airlines, local companies that undertake foreign contracts and local companies, which embark on foreign funded projects in Sri Lanka will benefit under the relaxation of foreign exchange rules this year. Speaking to the Daily News Business Deputy Governor Dharma Dheerasinghe said these foreign exchange control relaxations will bring in large sums of money to the country’s economy with projects such as power and building construction.