Non-residents will now have to pay for services in foreign currency in Sri Lanka, according to the Central Bank

Non-residents will now have to pay for services in foreign currency in Sri Lanka, according to the Central Bank

This comes in the backdrop of the Central Bank hiking the standing deposit facility rate and the standing lending facility rate by 50 basis points each to 5.50 percent and 6.50 percent respectively to control inflation rates, curb imports, and avoid a potential default later in the year. In its statement, it said the “measures will curtail the possible build-up of underlying demand pressures in the economy, which would also help ease pressures in the external sector, thus promoting greater macroeconomic stability.” The pandemic has also dealt a blow to the economy dependent hugely on tourism, with the government estimating losses to the tune of $14 billion over the last two years. The economy is also estimated to have contracted by 1.5 percent in July-September 2021.

Tourists visiting Sri Lanka will now be required to pay in foreign currency for their goods and services, according to the Central Bank, as part of its efforts to infuse more liquidity into the economy and replenish the country’s low foreign exchange reserves. The Central Bank of Sri Lanka issued the directives in order to improve macroeconomic stability. As a result, the central bank has advised registered tourist establishments to accept foreign currency solely for services supplied to those who do not live in Sri Lanka. According to the Central Bank of Sri Lanka’s monetary policy review for the month of January, all registered tourism facilities shall accept foreign exchange solely for services given to those residents outside Sri Lanka.

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