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The Central Bank of Sri Lanka (CBSL) said on Wednesday that the measures currently taken would ensure that by the end of 2021, official reserves would remain above $ 3 billion. Thus, the government and the Central Bank remain confident that the expected inflows will materialize and that the reserve position will remain at a comfortable level throughout 2022.

The full text of the CBSL statement is as follows.

Despite the headwinds of the economic impact of COVID-19 and the challenges posed by unfavorable developments in the external sector, the Sri Lankan economy has demonstrated resilience throughout 2021.

In addition, Sri Lanka has successfully honored its debt obligations by repaying foreign loans, including payments of international sovereign bonds. Since the beginning of the year, the Central Bank and the government have actively explored possible ways to replenish official reserves, with an emphasis on encouraging non-debt flows, so that existing external debt can be managed from the outside. sustainable way. These efforts have accelerated since October 2021 with the announcement of the six-month roadmap to ensure the stability of the macroeconomic and financial system, which sets the envisaged objectives for the constitution of official reserves in the short term.

As indicated in the half-yearly roadmap, numerous foreign currency inflows are envisaged in the very short term. The main foreign currency inflows to the Central Bank include SWAP facilities with central banks in the Middle East and other regions for an amount of approximately $ 2.0 billion.

The government is also in the process of securing government-to-government funding, syndicated loans, and loans from multilateral organizations. In addition, the expected foreign exchange facilities that were negotiated during high-level overseas visits by the authorities are also progressing well.

In addition, the interventions of the Central Bank on several aspects of the foreign exchange market, such as the incentive scheme introduced for workers’ remittances, and repatriation and conversion requirements due to export earnings will improve the liquidity in the domestic market, thus allowing the Central Bank to accumulate more official reserves.

With the recent increase in departures for employment abroad and the exponential growth in tourist arrivals, the foreign sector should recover well in the coming period and the pressures currently observed should ease with the increase in entries. in the economy.

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CBSL extends additional incentives for inbound worker remittances

The Central Bank of Sri Lanka (CBSL), after considering the requests made by the Sri Lankans

working abroad, decided to continue paying additional Rs. 8.00 per US dollar for

worker remittances, paid in addition to the Rs. 2.00 per US dollar incentive under the “Incentive scheme on inbound worker remittances”, for these workers’ remittances routed through licensed banks and other formal channels and converted into Sri Lankan rupees, until 31.01.2022.

The decision to maintain this additional incentive of Rs. 10.00 per US dollar is in response to favorable developments seen so far in workers’ remittances in December 2021.

In addition, CBSL also decided to bear the transaction costs incurred by Sri Lankans working

abroad up to a limit set when sending their money to Sri Lanka through exchange offices and / or banks.

As a result, a large portion of Sri Lankans working overseas could now send their money to Sri Lanka free of charge. Operating instructions in this regard, including the start date, will be issued by CBSL in due course. -CBSL


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