The island tightly controls foreign currency transactions under a 1953 law that does not allow the free repatriation of capital, in an effort to protect its modest foreign reserves. Under the present strict rules, exporters must bring back their foreign earnings within a short period of time or face penalties. Analysts say the policy deters investors.
“We can remove exchange controls before the next budget (in November),” Prime Minister Ranil Wickremesinghe said in parliament. “We are strong enough to do that. We have that confidence.”
Last week, Sri Lanka received the first tranche of a $1.5 billion bailout from the International Monetary Fund (IMF) to shore up the island’s economy, left reeling after a spending spree by the new government.
The premier said Sri Lanka’s foreign reserves were expected to double to $12 billion by the end of this year thanks to loans and grants from China, India and Japan. The island also plans to raise about $4.2 billion with two bond issues, Wickremesinghe said. dailytimes.com.pk