Central Bank relaxes Exchange Control rules for emigrants

COLOMBO: In the gradual implementation of new initiatives for the further rationalisation of foreign exchange transactions, the Central Bank has relaxed the exchange control rules for emigrants with effect from July 2, 2008.

This is the fourth measure in the most recent series of policy initiatives implemented by the Central Bank. These new series of initiatives are designed to promote international investor confidence, secure comparative advantages by moving to global financial markets and to further mobilise foreign savings to address the country’s domestic savings-investment gap.

The previous three liberalization measures that were implemented recently covered the permission to foreigners to invest in Treasury bonds, Treasury bills and commercial bank deposits with certain limits, states a Central Bank news release.

In view of the growing world-wide opportunities for migration consequent to the mobility of labour and in consideration of the financial support provided by Lankan migrants to the nation through inward remittances and investments, there has been a long-felt need to facilitate smooth migration by rationalising rules on outward remittances permitted at the time of immigration.

In Sri Lanka too, the amount of funds permitted for repatriation in this manner has been quite restrictive and a large part of the wealth belonging to migrants was required to be deposited in blocked accounts opened with commercial banks.

Further, only the income received in Sri Lanka such as pensions, rent and interest were released through the blocked accounts to emigrants.

There has also not been a procedure for the release of capital lying in the blocked accounts representing proceeds of property, etc. In this background, the Central Bank has now rationalized the rules on the repatriation of foreign exchange by emigrants as set out below.

(i). Balances in all blocked accounts as at 01st of July 2008 belonging to the past emigrants may be released without any restriction.

(ii). In relation to new emigrants, the following liberalized rules will apply.

a. A maximum amount of foreign exchange equivalent to US$ 150,000 is permitted for a family or a person not accompanying a family at the time of emigration. This will cover allowances and personal effects such as Jewellery and other goods exported.

b. Any local proceeds of wealth in excess of US$ 150,000 as stated (a) above is to be deposited in a blocked account carrying interest income with a commercial bank. Of such sum, a sum of US$ 20,000 or its equivalent will be allowed to be remitted each year.

c. Balances in blocked accounts may be utilized to meet any disbursements in Sri Lanka including investments permitted for non-residents.