Wednesday, January 13, 2010


Sri Lankans would be allowed to open bank accounts abroad and buy shares and debt of foreign companies as part of a loosening of foreign exchange controls, Central Bank governor Nivard Cabraal said.
Foreign investors would also be allowed to buy into Sri Lankan corporate debt. At the moment foreigners are only allowed to buy government Treasuries.

In 2009, foreign investors bought 1,705 million US dollars of Treasury bonds and bills from May to November, Cabraal said presenting his main monetary policy programme for 2010.

He said Sri Lanka's foreign reserves were at a historic high of 5.2 billion US dollars and in 2010 the balance of payments was expected to register a surplus of 700 million US dollars.

Cabraal said insurance firms would also be allowed to invest abroad. Sri Lankan firms would also be allowed to list abroad.

Foreigners on tour or business in Sri Lanka would also be allowed to open Sri Lanka rupee accounts.

Cabraal said the operating instructions to banks on the new foreign exchange rules were now being prepared.

The following is a list of the proposed foreign exchange liberalization moves announced on Monday.

1) Allowing Sri Lankans to open and maintain accounts with banks abroad

2) Allowing Sri Lankans to invest in equity or short term debt instruments in overseas companies

3) Allowing foreigners to invest in rupee denominated debentures issued by local companies

4) Allowing insurance companies to invest part of their assets of the general funds or technical reserves in foreign assets

5) Allowing listed companies to list on foreign stock exchanges

6) Allowing certain foreign companies to open places of business in Sri Lanka

7) Increase level of advance payments for imports

8) Removing restrictions on pre-payment of import bills

9) Removing margin requirements on selected imports under advance payments

10) Providing greater flexibility for forward contracts in foreign currency to cover current and capital transactions

11) Permitting the unification of accounts of foreigners for investment in securities

12) Allowing foreigners on tour or business in Sri Lanka to open Sri Lanka rupee accounts


No comments: