| The Central Bank (CB) has put on hold plans to relax foreign exchange controls including allowing Sri Lankans to freely open accounts abroad after the opposition said it was a ruse to siphon money out.
“There is an unnecessary political uproar over the relaxation of foreign exchange rules. This relaxation has been happening over the years,” Central Bank Governor Ajith Nivard Cabraal said yesterday, adding that they were not implementing these plans immediately ‘due to the issues raised.’
He told the Sunday Times that banks and top businesses had been seeking clarification as to when it would be implemented, “because it’s a positive development and welcomed by the business community for investment purposes and those who regularly travel abroad. Unfortunately the opposition has turned this into a political issue.”
Opposition politicians at news conferences to promote the presidential candidature of Sarath Fonseka have accused the government of relaxing the rules to allow powerful government politicians and their families to legally siphon out illgotten wealth ahead of the January 26 presidential election.
The Central Bank this month announced the relaxation in its 2010 Roadmap on Monetary and Fiscal Policy. Business and the stock market circles welcomed the move saying it would boost investments.
IMF Representative Koshy Mathai also welcomed the move. Some economists said they were concerned about huge outflows of foreign exchange through this move.
On this point, Mr Mathai told the Sunday Times, “It is intrinsically difficult to predict the impact of such measures on (foreign) reserves, and it thus seems sensible to attempt these reforms at a time when reserves are healthy.”
Foreign exchange reserves have steadily grown in recent months to record levels. |
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