ECONOMYNEXT – Sri Lanka’s central bank has issued rules requiring hotels to only accept payments in foreign currency, as a peg with the US dollar is under pressure due to low fixed overnight rates enforced with printed money.
Registered hotels have been mandated to collect charges in foreign currency and deposit them in banks within three days.
Hotels may also accept rupees, provided tourists can provide receipts of dollars converted at banks or authorized dealers.
Such records have to be kept for six years.
Hotels also have allow central bank officers free access to examine their books.
Sri Lanka’s legislators who complain of ‘cost of living’, ‘forex shortages’ have given wide discretion for the central bank to enact rules and controls after creating external difficulties by printing money, also under discretionary independence given by the parliament.
Sri Lanka is printing money to keep rates down despite a pick-up in domestic credit – partly driven by deficit spending. This month the overnight policy rate was raised by 50 basis points to 6.50 percent.
Lost access to bond markets also requires higher interest rates to generate more domestic savings to repay foreign debt on a net basis. Such saving sent out has the effect of lowering the external ‘current account deficit’ as Mercantilists say.
Communications Department
24.01.2022
CENTRAL BANK MAKES IT MANDATORY FOR HOTEL SERVICE PROVIDERS TO ACCEPT PAYMENTS FROM PERSONS RESIDENT OUTSIDE SRI LANKA IN FOREIGN EXCHANGE
The Monetary Board of the Central Bank of Sri Lanka issued Rules making it mandatory for hotel service providers to accept payments from persons resident outside Sri Lanka, only in foreign exchange. These Rules are published in the Gazette Extraordinary No. 2263/41 dated 21 January 2022.
With the issuance of the Rules, hotel service providers registered with and licensed by the Sri Lanka Tourism Development Authority are required to;
• accept payments for services rendered to persons resident outside Sri Lanka only in foreign exchange.
• deposit such foreign currency into a Business Foreign Currency Account of the hotel service provider or sell to a licensed bank within three business days.
• credit payments into a Business Foreign Currency Account of the hotel service provider, in the event such person resident outside Sri Lanka makes payments using an Electronic Fund Transfer Card (Credit Card, Debit Card, Travel Card, etc.).
At the same time, hotel service providers may accept payments in Sri Lanka Rupees from persons resident outside Sri Lanka provided they submit original documentary evidence to prove that such Sri Lanka Rupees represent the foreign currency brought into Sri Lanka and converted through a licensed bank or an authorized money changer.