Government restricts capital outflows suspending outward investment payments

There are also import restrictions of certain goods, as well as prohibiting commercial banks facilitating imports of vehicles.

Outward remittances have been limited, while inward remittances will be exempted from certain regulations and taxes.

A scheme has also been introduced to insure investors against foreign exchange risk, by allowing domestic currency proceeds from qualified investments in treasury bonds to be converted at the same exchange rate as prevailed at the time of initial investment.

Commercial banks are prohibited from purchasing foreign currency denominated Sri Lanka International Sovereign Bonds (ISBs) until June 2021, unless the transaction is financed by new foreign exchange inflows.

Sri Lanka will issue 75,000 million treasury bonds LKR 50,000 million Treasury Bonds under the series of 06.00% 2024‘A’ and LKR 25,000 million Treasury Bonds under the series of 07.80% 2027‘a’ are to be issued through an auction on January 27, 2021.

There has been a debt repayment moratorium, including a moratorium until April 2021 on bank loans for the tourism, garment, plantation and IT sectors, and SMEs, with CBSL providing refinancing and concessional lending facilities of 1% of GDP, partially supported by a CBSL guarantee.

In addition, the construction sector is eligible to borrow from banks with government guarantees. There was a three-month moratorium on small-value personal banking and leasing loans.

The interest rate on credit cards, overdrafts and pawning facilities will be capped. Financial institutions are also requested to reschedule non-performing loans, while capital conservation buffers and loan classification rules have been relaxed.