Sri Lanka relaxes newly imposed exchange control

ECONOMYNEXT – Sri Lanka has relaxed by 30 days a newly imposed exchange control that forced exporters to bring back foreign exchange, Information Minister Gayantha Karunathilaka said.

Sri Lanka forced exporters to bring back export proceeds by 90 days, reviving a three decade-old exchange control, after the Central Bank printed money to finance a budget deficit and created a balance of payments crisis in 2015.

The cabinet of ministers had approved a proposal by Finance Minister Ravi Karunanayake to extend the period to 120 days from August 01, and give a further 30-day grace period before punishing exporters

The Central Bank has tightened policy by raising rates and reducing outright purchases of treasury bills (monetizing debt). (Colombo/Aug17/2016 – Update II)