Central Bank relaxes restriction on using foreign currency for overseas transactions

The Minister of Finance, via the Central Bank, on Monday relaxed rules pertaining to the use of foreign currency for overseas purposes, since the foreign exchange crisis is easing.

“Considering the current and expected developments in the domestic foreign exchange market and with a view to further facilitate international transactions, the Minister of Finance, with the recommendation of the Monetary Board of the Central Bank of Sri Lanka and the approval of the Cabinet of Ministers, has issued a new Order under Section 22 of the FEA. This order has relaxed certain limitations on outward remittances for capital transactions and removed the restrictions on current transfers of emigrants, while continuing the other suspensions/limitations which were imposed under the previous order. The new order is effective for six months from 28.06.2023,” the Central Bank said in a media release.

The summary of the suspensions/limitations so relaxed are indicated below.

1. First time claim of migration allowance – allowed up to maximum of US$ 50,000 compared to $30,000 earlier.

2. Subsequent claims after the initial claim of migration allowance - up to a maximum of $20,000 compared to $10,000 earlier.

3. Repatriation of current income or accumulated current income of the emigrants – the limitation has been removed compared to maximum of $30,000 earlier.

4. Overseas investments through Outward Investment Accounts (OIAs) by eligible resident investors: (i) An additional investment to be made in already established subsidiaries or branch offices incorporated/registered overseas, for the purpose of working capital requirement of the investee - up to a maximum of $30,000 from $15,000 earlier

(ii). Invest in ordinary shares of a company outside Sri Lanka, for the purpose of expanding their core business in overseas which was earlier suspended, now allowed up to $200,000 for companies listed in the Colombo Stock Exchange (CSE), and up to $100,000 for companies not listed in the CSE

(iii) Set up overseas offices which was suspended in its limits earlier, now allowed up to $100,000.

5. Outward remittances on capital transactions via Business Foreign Currency Account - allowed up to a maximum of $100,000 for the purpose of expanding their core business overseas, compared to $20,000 earlier.

6. The suspension has been removed on outward remittances by companies incorporated in Sri Lanka, being subsidiaries or branch offices of overseas companies, to make investments in Employee Share Ownership Plan/ Employee Share Option Scheme.