Business

Central Bank suspends imports of vehicles and non essential goods to ease exchange rate pressure

The Central Bank of Sri Lanka has directed banks to suspend the facilitation of vehicle imports and non-essential goods as well as to suspend the purchase of Sri Lanka’s International Sovereign Bonds.

In addition, Authorised Dealers of foreign exchange are only allowed to issue foreign currency notes as travel allowance up to a maximum of USD 5,000 (or its equivalent in other foreign currency).

These measures were urgently adopted by the Central Bank today (19) to prevent panic in the financial market due to the COVID-19 Pandemic and will take effect immediately and apply to the next three months.

In a press release it stated that these measures have been introduced as per the provisions of the Monetary Law Act No. 58 of 1949, the Banking Act No. 30 of 1988, and the Foreign Exchange Act No. 12 of 2017.

Accordingly, licensed commercial banks and National Savings Bank are directed to adopt the following measures.

  1. Suspend facilitating importation of all types motor vehicles, other than those excluded specifically under Banking Act Directions No.01 of 2020, under Letters of Credit
  2. Suspend facilitating importation of non-essential goods specified in Banking Act Directions No.01 of 2020, under Letters of Credit, Documents Against Acceptance and Advance Payment
  3. Suspend the purchase of Sri Lanka International Sovereign Bonds by licensed banks in Sri Lanka

The Central Bank said it will continue to monitor market developments and take further measures as required, while ensuring adequate liquidity in the market in order to facilitate smooth operations and sustain market confidence amidst the COVID-19 outbreak.