Sri Lanka Central Bank relaxes Forex transactions
Tue, Mar 9, 2010, 12:00 am SL Time, ColomboPage News Desk, Sri Lanka.
Mar 08, Colombo: Sri Lanka Central Bank today announced further relaxation of its controls on foreign exchange transactions with effect from March 11.
The measure is taken to improve investor confidence as outlined in the Bank's "Road Map for 2010 and Beyond," the Bank said.
The Bank has eased several the restrictions placed on foreign investments earlier to boost the investor confidence and allow the foreign investors to carry out their transactions easily.
Under the new controls, the Bank has allowed the forward contracts in foreign currency to cover foreign exchange transactions related to trade in goods and services, remittances and approved foreign lending and borrowings.
According to a press release issued by the Central Bank, it will remove the current 100% margin deposit requirement against advance payments on the invoice value of selected items to be imported and the suspension on the pre-payment of import bills will be lifted.
The Bank will also permit non-resident investors to consolidate their different accounts in commercial banks into a unified account named as Securities Investment Account (SIA).
The Central Bank has taken these measures following the third review by the International Monetary Fund (IMF) last month which delayed the third tranche of the US$ 2.6 billion stand-by-arrangement for failing to meet the budget deficit target of 7% set by the IMF. The country recorded a budget deficit of 9.7% in 2009.