Sri Lanka’s central bank has defended new exporter dollar surrender requirements, which applies to both merchandise and services exports, imposed after money printing created forex shortages.
The new rules which allows for deductions, represent a relaxation for exporters with large import content, the central bank said.
“The residual after the utilisation of export proceeds as above will have to be converted into Sri Lanka Rupees,” the monetary authority said.
“This method, followed by several other countries, ensures that exports with a large import content are not penalised, while enabling exports with a higher domestic value addition to convert a greater percentage of proceeds, after meeting foreign currency financial obligations of such enterprises.”
Analysts had warned that then the official 203 to the US dollar is on the weak side, surrender requirements inject new money, further loosening the credit system, which is already bleeding dollars due to liquidity injections and low rates out of line with domestic credit developments.
However the central bank has been re-selling dollars to importers.
There have been also concerns that export revenues would also be diverted to unofficial channels, like remittances were diverted.
Exporters of services would find it even more easier to divert earnings and price service at or below cost, analysts say.
Economynext
The new rules which allows for deductions, represent a relaxation for exporters with large import content, the central bank said.
“The residual after the utilisation of export proceeds as above will have to be converted into Sri Lanka Rupees,” the monetary authority said.
“This method, followed by several other countries, ensures that exports with a large import content are not penalised, while enabling exports with a higher domestic value addition to convert a greater percentage of proceeds, after meeting foreign currency financial obligations of such enterprises.”
Analysts had warned that then the official 203 to the US dollar is on the weak side, surrender requirements inject new money, further loosening the credit system, which is already bleeding dollars due to liquidity injections and low rates out of line with domestic credit developments.
However the central bank has been re-selling dollars to importers.
There have been also concerns that export revenues would also be diverted to unofficial channels, like remittances were diverted.
Exporters of services would find it even more easier to divert earnings and price service at or below cost, analysts say.
Economynext
