Sri Lanka limits forex possession by citizens to support diminishing reserves

Edited By: Sayan Ghosh
New Delhi, India Updated: Jun 25, 2022, 06:01 PM(IST)

Sri Lankan Prime Minister Ranil Wickremesinghe Photograph:( AFP )

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The forex shortage forced Sri Lanka to default on their international debut in April this year and in order to improve the situation, Minister of Finance Ranil Wickremesinghe issued the order under the Foreign Exchange Act in order to get the forex reserves back into the banking system.

Sri Lanka is facing their worst economic crisis since gaining independence in 1948 and the government has been trying to implement a number of measures to improve the situation. The past couple of months has seen acute food shortages and inflation which resulted into uproar within the public. Now, the government has decided to reduce the limit of foreign currency that an individual can possess. The limit will reduce from USD 15,000 to USD 10,000 as the country looks to protect its quickly diminishing foreign exchange reserve and try to limit the already record levels of inflation.

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The forex shortage forced Sri Lanka to default on their international debut in April this year and in order to improve the situation, Minister of Finance Ranil Wickremesinghe issued the order under the Foreign Exchange Act in order to get the forex reserves back into the banking system.

“Reducing the amount of foreign currency retained in possession by a person in, or resident in, Sri Lanka from USD 15,000 to USD 10,000 or its equivalent in other foreign currencies,” an official statement said according to a PTI report.

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The people of Sri Lanka have been provided a period of 14 days to deposit the excess foreign currency and after that period, everyone will have to provide a proof of possession. This is a move that was hinted at by Governor of the Central Bank of Sri Lanka Nandalal Weerasinghe.

Sri Lanka are currently in conversation with the International Monetary Fund (IMF) in relation to their loan default and they are also talking with other nations about possible loan options.

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