Sri Lanka further relaxes Foreign Exchange Regulations

Aug 18, Colombo: Sri Lanka’s Central Bank on Wednesday said it has introduced a few new policy measures effective from August 17th to relax the foreign exchange regulations further and facilitate the foreign exchange transactions of the growing economy of the country.

Among many measures implemented, the Bank would relax restrictions for foreign investments in Unit Trusts allowing non-residents and foreign institutional investors to invest in Sri Lankan Unit Trusts and help expand the post-war economic boom.

According to a Reuters report Sri Lanka’s unit trust market is worth 26 billion rupees and opening it to foreign investors would help the Colombo Stock Exchange to attract big investors.

The 2011 Budget has proposed the removal of exchange control regulations in relation to investments in Unit Trusts to promote the investments and broaden the investor base, the Central Bank said.

The implemented measures also would allow Sri Lankan resident buyers to make payments to non-resident Sri Lankans in respect of purchase of real estate properties without having to obtain permission from Controller of Exchange to make payments to Non-Residents.

In a move to provide additional flexibility to those who wish to change foreign currency through formal channels, the Bank has granted permission for selected supermarkets to engage in money changing business.

Among other measures relaxations, permission has been granted for foreign citizens to convert earnings received in Sri Lankan rupees into foreign currency and allow Sri Lankan students to obtain loans from foreign financial institutions.

The Central Bank said it is of the view that the” relaxation of those foreign exchange regulations would enhance investor confidence, strengthen the foreign reserves in the long run and stabilize the foreign exchange market, thereby paving the way to integrating the Sri Lankan economy more closely with the global economy.”

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