The Central Bank of Sri Lanka (CBSL) today released a six-month road map to ensure financial stability.
The Governor of the Central Bank of Sri Lanka (CBSL), Ajith Nivard Cabraal unveiled ‘The Six-Month Road Map for Ensuring Macroeconomic and Financial System Stability’ today.
The CBSL will look to intervene in the Forex market by providing the funds to finance the country’s energy bills, and thereby to infuse liquidity.
The bank will also promote investments in Rupee denominated Government securities with a guarantee on the exchange rate, strengthen mandatory conversion of export proceeds, request the Government to tax profits of Exporters at 28% and not 14% where forex is not repatriated and converted, expand the moratorium while also providing liquidity support to affected Finance Companies, stop Parate executions and repossession of vehicles in the next six months for pandemic-affected borrowers and share the burden of Pandemic losses suffered by local SMEs by allocating Rs. 15,000 mn towards interest accrued, through a mechanism which is to be worked out.
The Central Bank will also use the monetary policy tools to unwind monetary stimulus extended during the pandemic, use macroprudential tools as well as microprudential regulation and supervision to guide the financial sector towards sustained stability, facilitate Education and Health related forex outflows immediately, lift the ceiling imposed on Outward investment and Migration allowances in January 2022 and discontinue cash margin deposit requirements on “nonessential/ non-urgent imports” with immediate effect.
The Central Bank will also establish the International Transactions Reporting System (ITRS) to monitor foreign exchange transactions commencing 01 January 2022, monitor services related foreign exchange inflows and ensure due repatriation and conversion and replace maturing debt obligations with new inflows through nondebt sources, wherever possible. (Colombo Gazette)