As Sri Lanka continues to grapple with a financial crisis, Prime Minister Mahinda Rajapaksa has issued a special gazette to restrict the flow of foreign currency out of the country.
The gazette has suspended remittances from Sri Lankan assets and funds granted to emigrants under the Migration Allowance. It also limits the repatriation of emigrant funds to a maximum of US $ 10,000 or its equivalent, while the general immigration allowance for migrants is limited to a maximum of US $ 30,000 or the equivalent at the relevant time.
The decision follows a dire warning from the Fitch Ratings agency which noted that Sri Lanka’s banks faced increased exposure to sovereign and foreign-currency funding and liquidity risks.
Earlier this year, the World Bank published a detailed report on the economic crisis Sri Lanka faces. In the last year, the country experiencing its worst growth rate on record, contracting 3.6 per cent throughout 2020, with a massive 16.4 per cent contraction in the second quarter alone. Economic recovery, the World Bank notes, will be reliant upon foreign direct investment and normalising tourism.
Sri Lanka faces additional risk with the possible repeal of preferable trading agreements granted under the GSP+.
Read more here.