CB relaxes mandatory conversion requirement on service export proceeds

With the view of encouraging service exporters to repatriate their export proceeds into the country, the Central Bank has withdrawn the mandatory requirement to convert service export receipts/proceeds that are received in Sri Lanka on or after 12 August 2022.

The service exporters may use their export proceeds so repatriated to Sri Lanka for the permitted purposes, it said, adding that the mandatory requirement to receive proceeds of service exports to the country within 180 days from the date of provision of services remains unchanged.

According to the information reported by banks, during the first six months of year 2022, a total of USD 1,533 mn has been received as service exports receipts, of which USD 406 mn has been converted to Sri Lankan Rupees.

The highest monthly service export proceeds of USD 324 mn were received in March 2022. During discussions with representatives of service exporters, they have highlighted the potential to further enhance export receipts, the CB said.

“All exporters are encouraged to bring in all export proceeds to the country at this time of need, while taking note of the mandatory requirement to receive such proceeds within 180 days.”

The Central Bank says it has intensified its monitoring on compliance with the relevant requirements with respect to exporters and Authorised Dealers.

Further information on the above mentioned relaxation can be obtained by referring to the “Repatriation of Export Proceeds into Sri Lanka Rules No. 02 of 2022” as published in the Gazette Extraordinary No. 2292/50 dated 12 August 2022, accessible through www.dfe.lk.

The Central Bank announced that the island nation will remove regulations that made exporters convert their foreign currency earnings into rupees in the near future.

In recent months, the central bank imposed a number of regulations forcing exporters to convert their US dollars within a set period of time to bolster Sri Lanka’s foreign reserves, reports Xinhua news agency.

“For services exports like IT and tourism, we will remove the mandatory conversion requirement,” Central Bank Governor Nandalal Weerasinghe told a press conference.

“We have no way to track these services. Apparently some exporters are not bringing in foreign currency they make because of the mandatory conversion rule,” he said.

He added that the central bank is also planning to relax a regulation that made tourists pay hotels in dollars.

Sri Lanka has been suffering a shortage of foreign exchange with its reserve assets standing at around $1.9 billion at the end of March.