Export proceeds conversion rules misinterpreted – Central Bank | Page 2 | Sunday Observer

Export proceeds conversion rules misinterpreted – Central Bank

9 January, 2022

Recent rules issued by the Central Bank of Sri Lanka (CBSL) in respect of repatriation and conversion of export proceeds to Sri Lanka Rupees have been misinterpreted by certain parties with vested interests, the Central Bank stated in a media communiqué yesterday.

The media release:

“Unfounded speculation has been mischievously spread that the CBSL rules require converting the entirety of workers’ remittances forcibly into rupees upon the receipt of such foreign exchange funds by licensed banks.

“Rules on conversion of export proceeds do not apply to workers’ remittances. Migrant workers who channel their earnings through licensed banks and other formal channels may hold such funds in foreign exchange at any commercial bank. It is not mandatory for Sri Lankans working abroad to convert their remittances into rupees.

“However, those who wish to convert those earnings into rupees would be eligible to do so while those who do so under the Incentive Scheme on Inward Workers’ Remittances announced by the CB, would receive an additional Rs. 10 per US dollar until January 31.

“Proceeds from the “Services exports” are foreign exchange earnings of resident Sri Lankans who provide tourism and professional services to non-residents. These services exports would be subject to the rules on conversion of the residual export proceeds after adjusting for permitted deductions.

“In this background, it is clear that the recent rules in respect of repatriation and conversion of export proceeds into rupees are applicable only to “Exporters of goods and services” from Sri Lanka, and that the new rules require exporters to convert only the residual balance of the export proceeds to rupees after deducting the permitted payments specified in the rules.

“In fact, such permitted payments cover outward remittances in respect of current transactions, withdrawal of foreign exchange as permitted, debt servicing expenses, purchases of goods and services, and investments in Sri Lanka Development Bonds (SLDBs).

“It must also be stated that similar repatriation and conversion rules for services export proceeds are applicable in other regional countries, including India, Bangladesh, Pakistan, and Thailand.

“The CBSL reiterates that it would continue to facilitate the enhancement of workers’ remittances in collaboration with the Government by incentivising funds remitted through formal channels, as previously stated, while taking stern legal action against all persons (those remitting and receiving) who indulge in illegal fund transfers.

“The public is requested to remain vigilant and not be misled by false information and promises. Licensed banks are also advised to strictly adhere to the rules stipulated by the CBSL with regard to the conversion of foreign exchange proceeds of customers, and apprise customers about such rules, to avoid any misunderstanding,” the statement added.