In a move to loosen up the foreign exchange controls slapped on the Lankan exporters, the government has decided to extend the 90 days earnings repatriation rule up to 150 days, taking effect from today – August 01, according to a government official. Further the period could also be extended on a case-by-case basis if the situation warrant a longer period based on practical reasons. According to Indira Malwatte, the Chairperson of the Export Development Board (EDB) the revision of the rule was in response to continuous calls by the exporter community to revisit the draconian styled control.
“In response to the continuous clamouring by the exporters, from August 01 onwards, the earnings repatriation days was extended to 150 days,” said Malwatte speaking at the 97th Annual General meeting of the Colombo Rubber Traders’ Association. On April 1, 2016 the Finance Minister Ravi Karunanayake issued a gazette notification requiring the exporters to bring back all their earnings no later than 90 days from the date of exportation of goods. But the rule met with widespread displeasure and opposition not only from the exporter community but also from the wider society as it was considered a slap on the social market economy the Prime Minister had been advocating for. The rule was brought in to bring back the dollars believed to have been kept in off-shore banks by the exporters as the government was desperate for foreign inflows to strengthen the dwindling foreign reserves and cushion the fragile Rupee
According to data at least 30 percent of exporter earnings are held in off-shore banks while only the rest is repatriated. The Premier Ranil Wickremesinghe wants to abolish the existing Exchange Control Act and to open the capital account which facilitates free movement of foreign capital – an extremely risky and a premature step to be tested in a country which has weak external assets.