It is not mandatory for Sri Lankans working abroad to convert their remittances into Sri Lanka rupees, the Central Bank of Sri Lanka (CBSL) stated on Saturday, quashing rumours that CBSL rules require converting the entirety of workers’ remittances forcibly into Sri Lanka rupees (LKR) upon the receipt of such foreign exchange funds by the Licensed Banks.
“Recent rules issued by the CBSL in respect of repatriation and conversion of export proceeds to LKR have been misinterpreted by certain parties with vested interests. In particular, unfounded speculation has been mischievously spread that the CBSL rules require converting the entirety of workers’ remittances forcibly into LKR upon the receipt of such foreign exchange funds by the Licensed Banks. Rules on conversion of export proceeds DO NOT apply to workers’ remittances,” CBSL said.
“Migrant workers who channel their earnings through Licensed Banks and other formal channels may hold such funds in foreign exchange at any commercial bank. Accordingly, it is NOT mandatory for Sri Lankans working abroad to convert their remittances into LKR. However, those who wish to convert those earnings into LKR would be eligible to do so while those who do so under the “Incentive Scheme on Inward Workers’ Remittances” announced by the CBSL, would receive an additional incentive of Rs. 10.00 per US dollar until 31 January 2022,” CBSL said.
“Proceeds from “services exports” are foreign exchange earnings of resident Sri Lankans who provide tourism, professional services etc. to non-residents. These services exports would be subject to the rules on conversion of the residual export proceeds after adjusting for the permitted deductions. In this background, it would be clear that the recent rules in respect of repatriation and conversion of export proceeds into LKR 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 into LKR after deducting the permitted payments specified in the rules,” the Bank explained.
The Central Bank further said: “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, as well.”
“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 announced, while taking stern legal action against all persons (those remitting and receiving) who indulge in illegal fund transfers. Accordingly, the general 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 their customers about such rules so as to avoid any misunderstanding,” the Central Bank said.
Seven factors of concern at upcoming Monetary Policy Review
by Sanath Nanayakkare
The Central Bank of Sri Lanka (CBSL) is scheduled to announce its latest monetary policy review on 20th January 2022, with all eyes on dwindling foreign reserves and foreign currency exchange in the country.
In this context, First Capital Research has named 7 factors of concern that could be taken into account at the upcoming monetary policy review. They are as follows.
* Foreign Reserves USD 3.1 billion – Dec 2021
* Inflation CCPI 12.1% – Dec 2021
* GDP Growth -1.5% – 3Q2021
* Private Credit LKR 60.5 billion – Nov 2021
* 03M T-Bill rate 8.38% as at 12.01.22
Liquidity and CBSL Holdings LKR -364.0 billion and LKR 1.42 trillion
Balance of Trade (BOT) and Balance of Payment (BOP) USD -6.5 billion and USD -3.3 billion for Jan-Oct 21
First Capital Research’s Policy Rate Forecast – Jan 2022-Apr 2022 notes that they believe the CBSL may highly consider tightening the monetary policy rates in this policy review but given the concerns over economic growth, there is a probability of 40% for CBSL to maintain its policy stance at current levels.
“With high frequent indicators improving in line with expectations, we have eliminated any probability of a rate cut. We expect a continued increase in probability for a rate hike in order to prevent overheating of the economy amidst the given fiscal and monetary stimulus,” they said.
As per First Capital’s view, CBSL either can choose to hike policy rates by 50bps or 100bps or hold policy rates steady, while a rate cut is off the table due to the high debt repayment and the high domestic borrowing requirement.
First Capital believes that there is a 60% probability for a rate hike due to the remedial actions required in achieving external stability.
However, there is also a 40% probability to maintain the policy rates at its current level in order to further improve the high frequency indicators.30%, they noted.
Sri Lanka’s dash brand enters international markets
Multichemi International Ltd, which manufactures and distributes a wide range of products under dash, one of Sri Lanka’s leading detergent and household care brands, has begun exporting its products to several international markets in Asia and Oceania, with plans also to enter Africa. The dash brand includes a wide range of products in car care, household care, home fragrances and laundry care sectors. Multichemi International Ltd, which has been awarded ISO 9001:2015 certification, is a Sri Lankan pioneer in environment-friendly cleaning products, having launched the country’s first biodegradable, safe cleaning products over 28 years ago.
Amila Wijesinghe, General Manager of the Company said,”Having conquered the domestic market, we are now ready to capture the international market. We are confident that our products which are of high quality will receive a good demand overseas as well. The feedback we have received so far from our overseas customers is extremely encouraging. We are dedicated to taking our products to the international market, to bring in foreign currency to the country and help uplift the economy”,
Janaka Abeysinghe appointed SLT CEO
Sri Lanka Telecom PLC has announced the appointment of Janaka Abeysinghe as its Chief Executive Officer (CEO) with effect from February 1, 2022.
The incumbent CEO Kiththi Perera will be overseas on leave for a period of two years to pursue higher studies, according to a stock market filing by the company.
Abeysinghe joined SLT in 1991. In his present role, he leads the enterprise and wholesale business of SLT that provides integrated voice and data solutions to enterprises, government institutions, domestic telco operators and global wholesale carriers.
In his career at SLT spanning 29 years, he has held a number of senior positions, including general manager Enterprise and International Sales and has extensive experience in the areas of Enterprise Digital Services, Enterprise Communications Solutions, Data Communications, Business Development, Domestic and International Switching Operations and Global Wholesale Voice & Data Business.
He holds a Master’s Degree in Electrical and Computer Engineering from the University of Kansas, USA and a BSc degree in Electronics and Telecommunications Engineering with a First Class Honours from the University of Moratuwa.
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