Temporary working capital

Nine restrictions on remittances will be in effect for 6 months from July in Sri Lanka

Statement by the Central Bank of Sri Lanka

In an effort to help and maintain the stability of the financial system by minimizing pressure on the exchange rate and preserving the country’s currency reserve position, the Hon. The Minister of Finance, with the recommendation of the Monetary Council of the Central Bank of Sri Lanka and the approval of the Cabinet of Ministers, issued an order under Article 22 of the Foreign Exchange Law, No.12 of 2017 , published in the Extraordinary Gazette Notifications N ° 2234/49 of July 2, 2021.

Accordingly, the following suspensions / restrictions on outgoing remittances will be in effect for six (06) months from July 2, 2021.

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I. Suspend the repatriation of funds under the migration allowance from funds received under the
monetary gifts by an emigrant from an immediate family member (ie parents, grandparents, siblings and spouse of the emigrant).

ii. Limit the repatriation of migration allowance funds through the rupee capital transactions accounts by emigrants who have already applied for the migration allowance under the general authorization, up to a maximum of 10,000 USD or the equivalent in any other designated foreign currency.

iii. Limit the eligible migration allowance for emigrants requesting migration
allowance for the first time under general authorization, up to a maximum of USD 30,000 or
equivalent in any other designated foreign currency.

iv. Limit the repatriation of any current income or accrued current income (including
Employee Provident Fund (EPF), Employee Trust Fund (ETF), gratuities and pensions or any other retirement benefit) by emigrants through rupee capital transaction accounts or emigrant refundable income accounts , under general authorization, up to a maximum of $ 30,000 or the equivalent in any other designated foreign currency.

V. Limiting remittances or issuance of foreign currency for any Sri Lankan
who resides in or outside Sri Lanka and has obtained a temporary resident visa from another country that falls under a visa category that allows the individual to obtain permanent resident status or citizenship in that country at a later date, up to a maximum of USD 20,000 or equivalent in any other designated foreign currency.

vi. Limit the issuance of foreign currency for anyone residing in Sri Lanka who intends to leave Sri Lanka on the Temporary Resident Visa of another country to a maximum of USD 10,000 or the equivalent in any other designated foreign currency.

vii. Suspend payments through outgoing investment accounts for the purpose of making overseas investments by persons residing in Sri Lanka under the general authorization granted in the Annex to Regulation No. 1 of 2021 published in the Extraordinary Gazette
Notifications n ° 2213/34 of February 03, 2021, excluding:

(a) investments to be financed by means of a foreign currency loan obtained by the investor from
a person residing outside Sri Lanka under the provisions of the Foreign Exchange Act, or

(b) an additional investment to be made to meet the regulatory requirements of the country of the issuing entity applicable to the investment already made in accordance with the provisions of the law or repealed law on exchange control, in a company or branch
in this country, or

(c) an additional investment / injection of funds (if applicable) to be made by eligible resident companies in subsidiaries or branches already established abroad constituted / established subject to the provisions of the law or the repealed exchange
Control Act, up to a maximum of $ 15,000 or the equivalent in any other designated country
foreign currency, for the purposes of the working capital requirements of the issuing entity, or

(d) remittances for the purposes of maintaining the liaison, marketing, agency, project, representative or any other similar office already established abroad subject to the provisions of the law or of the repealed Law on Foreign Exchange Control, by Eligible Resident Companies, up to a maximum of USD 30,000 or the equivalent in any other designated foreign currency; provided that the head of the Foreign Exchange Department is satisfied with this requirement.

VIII. Limit remittances on capital transactions through foreign currency business accounts or personal foreign currency accounts held by a person residing in Sri Lanka, up to a maximum of USD 20,000 or the equivalent in any other currency designated foreign national, during the period of effect of this decree;

ix. The Monetary Board has the power to grant authorization under Article 7 (10) of the Foreign Exchange Law for investments on a case-by-case basis that exceeds the limits specified in the general authorization granted in Regulation No. 1 of 2021 provided that,

(a) the proposed investment must be financed by a foreign currency loan obtained by the
investor of a person residing outside Sri Lanka under the provisions of the
Trade Law, or

(b) the proposed investment must be made to meet the regulatory requirement in the
country of the issuing entity applicable to the investment already made in a company or branch in that country in accordance with the provisions of the law or the repealed law on exchange control.

Further information can be obtained by visiting www.dfe.lk.

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