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Friday July 1st, 2022

Sri Lanka to hike mandatory foreign exchange surrender rule

ECONOMYNEXT – Sri Lanka’s central bank will raise the foreign exchange surrender rule for exporters, after permitted debits, Central Bank Governor Nivard Cabraal said.

“We will issue new regulations on convert export proceeds after permitted debits,” Cabraal said delivering a 6-month roadmap.

“The balance would have to be converted.”

At the moment exporters have to convert 25 percent of export proceeds of which 10 percent is sold to central bank by banks.

Exporters are now charged corporate income tax at 14 percent and the central bank may request government increase it to 28 percent, he said.

No change will be made to personal foreign currency accounts, Cabraal said.

Licenses of 27 money changers which have been cancelled will be restored, he said. They were cancelled because they were not depositing the required amount of forex in banks.

Cabraal said such rules were found in Myanmar, Thailand and Nepal.

Sri Lanka’s rupee has come under pressure due to money printing (central bank credit) which has injected rupee reserves into banks, which made outflows exceed the inflows coming to the country.

Cabraal had already started to allowed bond market rates to go up. (Colombo/Oct01/2021)

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