• No plan to ease ban despite improved forex inflow: Trade Min. 

Despite the recent improvement of the foreign exchange liquidity crisis in the country, there are no plans to relax the restrictions imposed on open account payment trading terms on 29 April 2022, the Ministry of Trade reveals. 

Speaking to The Sunday Morning Business, Trade Ministry Secretary A.M.P.M.B. Atapattu stated that although exemptions had been provided for certain essential goods in the immediate aftermath of the prohibition of open account trading, the grace period provided under such exemptions had expired. Therefore, since the beginning of 2023, open account trading had been fully restricted in Sri Lanka, he said.

He further said that there were currently no plans to relax these restrictions on open trading: “There is no need for open account trading. Documents against Acceptance (DA) and Documents against Payment (DP) trading have been reactivated. Banks have sufficient forex now and are opening Letters of Credit. Therefore, the need for open accounts does not exist anymore. Furthermore, importers are not even asking us to relax the restrictions.”

However, speaking to The Sunday Morning Business, a source from the import industry stated that following the restrictions on open accounts, the industry had been forced to adapt and at present, the entire import process had become burdensome due to the existence of considerable red tape. 

“The open account trade system was very relaxed. You receive the consignment together with the documents and then you take the documents to the bank and ask the bank to settle it. There was no pre-approval required from the bank. This was very beneficial for regular imports. Now importers are forced to obtain prior approval of the import and export controller and the bank before importing,” he stated.

Commenting further, he asserted that the open account trading method was the cheaper and less complex way of trading. Now, importers are forced to bear high documentation costs. Therefore, he stated that it would be in the interest of the importers if the Government were to gradually relax the open account trade restrictions.

On 29 April 2022, Central Bank Governor Dr. Nandalal Weerasinghe pre-emptively announced that the Import and Export Control Department of the Finance Ministry would publish new regulations prohibiting the import of goods through open accounts in order to dismantle the undial/hawala money transfer systems and the burgeoning local black market for foreign exchange. 

Consequently, this was implemented by the Ministry of Finance through the Imports Control Regulations No. 7 of 2022, which restricted the importation of goods under open account payment terms.