Sri Lanka tightens foreign exchange controls for three months

Sri Lanka has tightened foreign exchange controls for three months to limit outflows as the rupee depreciated sharply against the US dollar.

In a gazette published last Thursday, Prime Minister Mahinda Rajapaksa announced certain restriction on making payments through Outward Investment Accounts for the purpose of making investments in overseas.

The gazette stated that Outward Investment Accounts have been suspended except for investments to be made using a foreign currency loan obtained by the investor from a person residing outside Sri Lanka.

Outward remittances other than those on current transactions through Business Foreign Currency Accounts of Personal Foreign Currency Accounts held by those residing in Sri Lanka have also been suspended.

Meanwhile, Prime Minister Rajapaksa, the country’s finance minister, also said in the gazette that the eligible migration allowance for emigrants obtaining it for the first time has been limited to a maximum of 30,000 US dollars.

The repatriation of funds under the migration allowance through Capital Transactions Rupee Accounts by emigrants has also been suspended, the gazette read.