Measures have been taken by the Central Bank (CB) with effect from July 2 to relax the exchange control rules for emigrants by rationalizing rules on outward remittances permitted at the time of migration.
The CB said in a statement this week that it expects these steps to further promote stable capital mobility and improve investor confidence in Sri Lanka in moving towards the long-term objective of becoming a financial hub in the region.

According to the CB, this is another step in the gradual implementation of new initiatives for the further rationalization of foreign exchange transactions. The CB stated that in several other countries including Sri Lanka, the amount of funds permitted for repatriation has been quite restrictive and a large part of the wealth belonging to migrants was required to be deposited in blocked accounts opened with commercial banks.

Further, only the income received in Sri Lanka such as pensions, rent and interest were released through the blocked accounts to emigrants. There has also not been a procedure for the release of capital lying in the blocked accounts representing proceeds of property, etc.

The new rules which came in effect on July 2 are as follows:
1.Balances in all blocked accounts as July 1, 2008 belonging to the past emigrants may be released without any restriction. 2.In relation to new emigrants, the following liberalized rules will apply: (a) A maximum amount of foreign exchange equivalent to US$150,000 is permitted for a family or a person not accompanying a family at the time of emigration.

This will cover allowances and personal effects such as jewellery and other goods exported. (b) Any local proceeds of wealth in excess of $150,000 as stated (a) above is to be deposited in a blocked account carrying interest income with a commercial bank. Of such sum, a sum of $20,000 or its equivalent will be allowed to be remitted each year. (c) Balances in blocked accounts may be utilized to meet any disbursements in Sri Lanka including investments permitted for non-residents.