Sri Lanka goes ahead with foreign exchange market liberalisation
View(s):Sri Lanka has initiated the process of repealing the draconian Exchange Control Act and replacing it with an Exchange Management Act to liberalise the foreign exchange market. This was revealed at the Cabinet Committee on Economic Management (CCEM) meeting held in Colombo recently. Following the enactment of this bill, foreign investors will be allowed to bring in funds to any bank and there would be no necessity to bring them in through special investment accounts.
The CCEM was of the view that it is necessary to ensure the macroeconomic stability and very close monitoring of banks and the prudential regulations must be in place, state officials said. Some officials who attended the meeting expressed concern on the outflow of cash. However the committee concluded that the concept of exchange control is outdated but it is also essential to tackle the issues of cash outflow. A proposal has been made to extract the relevant provisions from the draft bill on Foreign Exchange Management Act of 2003 and draft a new act. -(Bandula)