Sri Lanka to relax regulations over foreign earnings conversion control
Apr 30, 2022
Colombo [Sri Lanka], April 30 : Sri Lanka's Central Bank has announced that they will remove the regulations that made the exporters convert their foreign currency earnings into rupees in the coming future.
In recent months the central bank has imposed various regulations that forced the exporters to convert their US dollars within a period of time to support the island nation's foreign reserves, Xinhua News Agency reported.
Addressing a press conference, Central Bank Governor Nandalal Weerasinghe on Friday said, "For services exports like IT and tourism, we will remove the mandatory conversion requirement."
"We have no way to track these services. Apparently, some exporters are not bringing in foreign currency they make because of the mandatory conversion rule," he added.
He added that the central bank is also planning to give relaxation to tourists who were made to pay the hotels in dollars, reported Xinhua.
Earlier in the day, Sri Lanka's central bank governor said domestic debt in the form of government securities and development bonds will not be restructured as restructuring external debt is a top priority for the island nation.
Central bank governor Nandalal Weerasinghe also provided an update on the progress made during the recent discussions with the International Monetary Fund (IMF) and World Bank.
Addressing a meeting of the Committee of the Ceylon Chamber of Commerce, he said progress has been made towards establishing a macro-fiscal policy framework and initiating structural reforms.
The central bank governor also expressed confidence that a staff-level agreement with the IMF is likely to be reached within the next two months.
Weerasinghe announced that additional measures will be implemented to address urgent economic concerns, reported Xinhua.
The measures include introducing regulations to encourage the U.S. dollar flows currently transacting in the informal market to be channelled through the formal banking system.
As a result of policy measures already introduced by the central bank and the government, he is of the view that expenditure on imports will be declining further to more sustainable levels.
Sri Lanka is going through an economic crisis brought about by foreign currency shortages and it halted external debt repayment on April 12.
