Cash Margins on importing non-essential items removed

COLOMBO (News 1st); The Central Bank of Sri Lanka has decided to remove the cash margins imposed on the importation of non-essential items with immediate effect, announced Governor Ajith Nivard Cabraal on Friday (1).

He requested and invited the importers to act responsibly and only import what is necessary, and appealed to importers not to stockpile additional inventory.

"We want to assure the importers that there will be sufficient foreign exchange and reserves available for them and we would like to ensure that their imports are done in such a way that they do not need to stockpile unnecessarily," said the governor.

He was speaking at the launch of the Six-Month Road Map for Ensuring Macroeconomic & Financial System Stability by the Central Bank of Sri Lanka.

He further added that NO changes whatsoever will be made to the personal foreign currency accounts (PFCA), previously knowns as the NRFC / RFC accounts.

The Central Bank Governor noted the Central would provide support to the Financial Sector with unwinding the moratoria in a soft manner and devise long-term plans to support businesses affected by the pandemic-related lockdown.

The Central Bank Governor also said measures will be taken to Stop Parate Executions and the Repossession of Vehicles in the next six months for pandemic-affected borrowers.

He said the Central Bank will provide liquidity support of up to Rs. 15 Billion to finance interest accrued in loans that have been given the moratorium so that Financial Institutions could deal with the moratorium effect in a suitable manner.

He added that the CBSL will use monetary policy tools to unwind monetary stimulus extended during the pandemic, and also facilitate education and health-related forex outflows.

The Central Bank has also decided to lift the ceiling imposed on outwards investment and migration allowances in January 2022.

The Central Bank Governor said an International Transactions Reporting system will be established to monitor foreign exchange transactions.

He said the Central Bank is considering the possibility of buying back the entire issue of ISBs maturing in January 2022 and/or July 2022, if high discounts are prevalent in the market.

The Central Bank expects the Gross Official Reserves to be enhanced to cover a minimum of four months of imports, by the end of March 2022, and also expects Foreign Holding of 2.5% in rupee-denominated government securities.

The Central Bank believes with the success of the vaccination rollout, the gradual opening of the country under strict adherence to health guidelines is expected to help all sectors to return to normalcy gradually.