New rules to convert export proceeds have no impact on Sri Lankans working abroad: CBSL

Sri Lanka’s Central Bank emphasizes that inward remittances by Sri Lankan expatriates, which are not considered as services exports, will not be subjected to new export proceeds conversion rules.

Under the new rules issued on 28 October 2021, the minimum mandatory conversion rate of 25 percent has been relaxed, and instead, exporters have been provided with the opportunity to utilize export proceeds for:

a) outward remittances in respect of current transactions;
b) withdrawal in foreign currency notes, as permitted;
c) debt servicing expenses and repayment of foreign currency loans;
d) purchases of goods and obtaining services including one-month commitments; and
e) payments in respect of making investments in Sri Lanka Development Bonds (SLDBs) in foreign currency up to ten percent of the export proceeds, so received.

Accordingly, the residual after the utilization of export proceeds as above will have to be converted into Sri Lanka Rupees.

Considering the importance of the growing services export sector and the concessions provided to such sectors over time to expand their activities by the Government, the rules have been extended to services exports as well.

This coverage has been defined in the rules as payments received in foreign exchange by a person resident in Sri Lanka for services (including professional, vocational, occupational, or business services) provided to a person resident outside Sri Lanka.

Accordingly, remittances by Sri Lankan expatriates, which are not considered as services exports, will not be subjected to these rules.

The implementation of the new rules, which treat merchandise exports and services exports equally, is expected to provide greater foreign currency liquidity to the domestic market.