Sri Lanka has temporarily tightened foreign exchange controls

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

Sri Lankan Prime Minister and Minister of Finance Mahinda Rajapaksa issued an Extraordinary Gazette notice in this regard.

The Government has taken steps to suspend persons resident in Sri Lanka from making payments through Outward Investment Accounts for overseas investments for a period of three months.

The suspension will also affect the repatriation of funds under the migration allowance through Capital Transaction Rupee Accounts by migrants who have already claimed the migration allowance under the general permission granted by exchange control regulations.

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.