Sri Lanka cuts the amount of foreign currency people can hold

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Colombia, Sri Lanka –


Sri Lanka will reduce the amount of foreign currency individuals can hold to $10,000 from $15,000 and penalize anyone who holds foreign currency for more than three months by making it illegal, the head of the central bank announced on Thursday. island nation in the midst of the worst. economic crisis in recent memory.


Central Bank Governor Nandalal Weerasinghe told reporters that people are requested to deposit excess foreign currency in a bank or convert it to local currency within two weeks of his announcement. After that time, central bank officials and police will carry out raids, he said, adding that anyone caught violating the new rules will be fined.


The move, which will be implemented under the country’s foreign exchange law, comes amid a severe shortage of foreign exchange which has led to difficulties in paying for the import of essential goods such as fuel, gas cooking, medicine and food.


For several months, Sri Lankans have endured long queues to buy these basic necessities, most of which come from abroad. Hard currency shortages have also hampered imports of raw materials for manufacturing and aggravated inflation.


Protesters were blocking major roads to demand petrol and fuel, and local TV channels showed residents in some areas fighting over petrol and fuel.


Weerasinghe said black market bounties led people to collect foreign currency banknotes and keep them at home or in safe deposit boxes.


Police recently raided two unspecified locations that contained foreign currency notes and seized 40,000 US dollars and 50,000 euros.


The Indian Ocean island nation is on the verge of bankruptcy and has suspended payments on its foreign loans. Its economic difficulties caused a political crisis, with the government facing widespread protests.


Sri Lanka has suspended repayment of about $7 billion in foreign loans due this year out of the $25 billion to be repaid by 2026. The country’s total external debt stands at $51 billion. The Ministry of Finance says the country currently has only $25 million in usable foreign exchange reserves.


Sri Lanka is now almost without gasoline and also faces a severe shortage of other fuels. Authorities have announced power cuts across the country stretching up to nearly four hours a day because they cannot supply enough fuel to power stations.


Protesters have occupied the entrance to the president’s office for more than a month demanding the resignation of President Gotabaya Rajapaksa. Months of anti-government rallies have led to the near dismantling of the once-powerful ruling family, with one of the president’s brothers stepping down as prime minister, and other siblings and a nephew quitting their cabinet posts.


Protesters accuse the Rajapaksas of triggering the crisis through corruption and mismanagement.


Sri Lanka’s new prime minister, Ranil Wickremesinghe, said on Monday about $75 billion was urgently needed to help provide the nation with essential items, but the country’s treasury is struggling to find even- what a billion dollars.


Attacks by Rajapaksa supporters on protesters last week sparked nationwide violence that left nine dead, including a lawmaker, and more than 200 injured. Many homes of lawmakers and their supporters were burned down.


Protesters who have taken to the streets since March hold Rajapaksa and his family – who have dominated nearly every aspect of life in Sri Lanka for most of the past 20 years – responsible for the crisis.


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