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Forex crisis: Sri Lanka lowers limit of foreign currency people can hold to USD 10,000

Amid fuel crisis, Energy Minister Kanchana Wijesekera said that posts shared on MPs being given subsidised fuel rates are false.

Published: 19th May 2022 07:42 PM  |   Last Updated: 19th May 2022 07:42 PM   |  A+A-

Foreign exchange, US Dollar, Dollar notes

Image used for representational purpose only. (File Photo)

By PTI

COLOMBO: Sri Lanka's central bank on Thursday decided to substantially lower the limit of foreign currency a person can hold to USD 10,000 from USD 15,000 and said it will crack down on those possessing them for over three months as the island nation faced its worst economic crisis.

The move by the Central Bank comes amid a severe shortage of foreign currency that has resulted in difficulties in paying for the import of essentials such as fuel, cooking gas, medicine and food, forcing people to stay in long lines to buy the limited stocks.

Governor of the Central Bank of Sri Lanka Nandalal Weerasinghe told reporters that under the Foreign Exchange Act, there is a limit anyone can hold foreign currency, which used to be a value of maximum USD 15,000.

Stating that the apex bank is looking towards bringing it down to USD 10,000, the CBSL Governor said that even with that USD 10,000, proof of how the person came to possession of the relevant funds must be presented.

"Accordingly, a grace period of two weeks will be given to current holders to deposit this money either in their foreign currency accounts in the banking system or surrender that money and convert them to rupees and keep them in rupees. Under Sri Lanka's foreign exchange law, currency notes which are held against contravening the rules will be seized," he added.

EconomyNext news website reported that police and central bank officials will take action to seize foreign currency held by the public. "Many people were holding notes at home and also in bank vaults," he said.

Sri Lanka has suspended repayment of about USD 7 billion in foreign loans due this year out of USD 25 billion to be repaid by 2026.

The country's total foreign debt is USD 51 billion. The finance ministry says the country currently has only USD 25 million in usable foreign reserves. It has led to limited imports with no gasoline in filling stations.

Other fuel, cooking gas, medicine and foods are in short supply. Authorities have announced countrywide power cuts extending up to nearly four hours a day because they can't supply enough fuel to power generating stations.

Amid fuel crisis, Energy Minister Kanchana Wijesekera said that posts shared on MPs being given subsidised fuel rates are false. "No MP from either side or anyone has been given subsidised rates than the current market prices given to the public," he tweeted.

Further, the Minister said that he instructed the Ceylon Petroleum Corporation to carry out an investigation on the rates displayed in the dispenser at the police garage and will make a statement in Parliament. "No one will be extended privileges on fuel stations other than ambulance essential services," he further tweeted.

In his statement to Parliament, the Minister said the Ceylon Petroleum Corporation has never sold fuel to any MPs at a price less than the market rates, on any occasion. "You (Speaker) has requested the Inspector General of Police over the possibility of providing fuel for MPs to visit Parliament during the days that Parliament convenes," he told Parliament.

He said following the Speaker's request to the Inspector General of Police, the Ceylon Petroleum Corporation has made it clear to sell Petrol for Rs. 334.19, Auto Diesel for Rs. 289.13, upon payment made by cash.

The minister also said that filling stations are only permitted to sell fuel subject to the present conditions, which is a maximum of Rs.8,000, except for vehicles engaged in transportation services. "The rate of Rs. 121 is what existed several years ago," he told Parliament, adding that the said filling station was instructed to stop selling fuel upon payment by cash.

Further, Energy Minister Wijesekera said an investigation will be carried out for not updating the said gasoline pump or the dispenser. Sri Lankan authorities have decided to suspend the issuing of fuel from the Narahenpita Police Transport Division for selected vehicles following public outcry.

The Ceylon Petroleum Corporation on Thursday said that it stopped selling fuel to parliamentarians from the Narahenpita Police Transport Division's filling station after reports emerged that fuel was being sold at subsidised rates.

“"We don't sell fuel at subsidised rates at any filling station. We cannot imagine selling fuel at a loss," said Attorney-at-Law Sumith Wijesinghe, the Chairman of the Ceylon Petroleum Corporation adding that the supply of fuel from the filling station was suspended.

Speaker Mahinda Yapa Abeywardana had requested the Inspector General of Police to sell fuel from the Narahenpita Police Transport Division to parliamentarians on Wednesday. SJB MP Thalatha Athukorala speaking in Parliament on Wednesday also noted that the Inspector General of Police had been instructed by the government to provide fuel to all the Members of Parliament.

"This decision has put us in danger," she pointed out, noting that it is unfair for MPs to be given special treatment for fuel while the people in the country are forced to wait in line for hours for fuel.

Sri Lanka Police in a statement on Thursday morning said that instructions were given to provide fuel upon payment of cash for the vehicles that belong to Members of Parliament that enter the Narahenpita Police Transport Division for fuel.

Sri Lanka Police tightened security at the premises as authorities took measures to rectify the dispenser, as the Energy Minister revealed in Parliament that the said dispenser was not updated in years. Sri Lankans have been protesting for more than a month demanding the resignation of President Gotabaya Rajapaksa, holding him responsible for the country's worst economic crisis in recent memory.



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