Sri Lanka appeals for forex inflows to combat COVID-19, lifts inward restrictions

ECONOMYNEXT- Sri Lanka has relaxed all restrictions on foreign currency inflows while its Central Bank issued a global appeal to Sri Lankans and charities to make foreign currency deposits in the country’s banks to assist in efforts to contain the spread of COVID-19.

The Central Bank released a letter Thursday co-signed by Central Bank Governor W.D. Lakshman and Treasury Secretary S. R. Attygalle on behalf of the Cabinet of Minister, which appealed to all Sri Lankans and well-wishers living in Sri Lanka and abroad to send in their foreign currency.

“We guarantee that your foreign currency deposits into the Sri Lankan banking system will be accepted without hindrance from the government, Central Bank or any other government authority,” the letter of appeal said.

“We also guarantee future convertibility of these deposits into foreign currency whenever you desire to do so. All your forex remittances will be exempted from Exchange Control Regulations and taxes and protected under banking secrecy provisions,” the letter said.

The government has decided to suspend all restrictions on foreign currency inflows during a COVID-19 preventive period which is for three months from April 2nd, 2020.

Sri Lanka will ban all non-essential imports except fuel and medicine and launch a drive to grow vegetables, as the island battles against Coronavirus and the currency came under pressure from liquidity injections.

Sri Lanka ratcheted up liquidity injections with the central bank purchasing Treasuries and CB re-financed credit scheme was launched, raising fears of further monetary instability.

Sri Lanka has already halted the import of vehicles and a series of non-essential items as the rupee came under pressure.

Sri Lanka has confirmed 146 persons with Coronavirus so far and 21 have recovered including a Wave I case from Wuhan China.

The Central Bank’s statement in full:

The Central Bank of Sri Lanka invites all Sri Lankans and well-wishers living in Sri Lanka and abroad to consider depositing their savings and other funds in foreign currency within the Sri Lanka banking system – Licensed Commercial Bank and Specialised Financial Institutions – as a gesture of goodwill and assistance to Sri Lanka and its people during the three months commencing from April 2, 2020, in support of the wide-ranging national effort to safeguard people from coronavirus, to bring its spread under control and to provide healthcare and social security to the people. Your foreign currency deposits in Sri Lankan banking system at this difficult stage will be of immense help to authorities to tide over the present crisis.

We guarantee that your foreign currency deposits into the Sri Lankan banking system will be accepted without hindrance from the government, Central Bank or any other government authority. We also guarantee future convertibility of these deposits into foreign currency whenever you desire to do so. All your forex remittances will be exempted from Exchange Control Regulations and taxes and protected under banking secrecy provisions.

This appeal goes to all Sri Lankan expatriates and those living in Sri Lanka with foreign currency holdings. The country welcomes remittances inflows to the banking system in Sri Lanka from them as well as from charitable organisations, funds and well-wishers all over the world, with the well-being of Sri Lanka and its people in their hearts. Such remittances would go along way to promote people’s welfare during the current period of still-spreading COVID-19, and economic revival in the immediate aftermath.

This announcement and appeal are made following a decision of the Government of Sri Lanka made during the April 1st meeting of the Cabinet of Ministers. The Cabinet has decided to suspend all restrictions on foreign currency inflows in Sri Lanka during COVID-19 preventive period, defined as three (3) months commencing 2nd April 2020.

(Edited by Devan Daniel; Colombo, 02 April 2020)

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