Government to enact renewed regulations promoting foreign exchange inflows
Government is now set to introduce renewed regulations with the aim of promoting foreign exchange activities in the market despite disruptions of Covid-19 and current geopolitical trends.
These regulations will be enacted in parliament soon under the Foreign Exchange Act (FEA) further facilitating and simplifying foreign exchange transactions while preserving foreign reserves, official sources divulged.
This will also prevent any out flow of foreign exchange through illicit means and any depletion of domestic reserves owing to speculative measures by individuals or establishments.
In the long run, the foreign exchange management structure will be reviewed in order to streamline foreign exchange transactions, a senior official told the Business Times.
“With a view of upgrading Sri Lanka as a hub for foreign direct investment (FDI) in the region the government attracts investors with 100 per cent foreign ownership in most sectors and grants them identical status with local investments”, he said. The government has taken measures to preserve the foreign currency reserve position of the country while facilitating the foreign currency inflow via FDIs and remittances
It will amend certain existing regulations while introducing regulations under the Foreign Exchange Act with the approval of the Cabinet to achieve this objective, State Minister for Finance Nivard Cabraal said.
Sri Lanka was planning incentives to attract overseas investors into local bonds in a bid to reduce the nation’s reliance on foreign debt, he said.
He added that the reviewing of regulations is necessary to permit more investment/infusion of funds in to the country.
Sri Lanka will be changing several orders and regulations, involving capital transactions of residents, non-residents and maintaining accounts.
Any person resident outside Sri Lanka including country funds, regional funds, investment funds and mutual funds established outside the country will be facilitated with easing of some restrictions in capital transactions in foreign exchange.
They will be allowed to remit foreign exchange into Sri Lanka in terms of the general permission granted by the Government without restrictions, official sources said.
Permission will be granted for investments to be financed out of a foreign currency loan obtained by the investor from a person resident outside Sri Lanka under the provisions of the Foreign Exchange Act.