Sri Lankan government extends Special Deposit accounts after attracting over US$ 360 million
The government of Sri Lanka has reportedly decided to extend the validity period of Special Deposit Accounts (SDA) that were introduced by the government last year since they have attracted US$ 360.3 million.
Cabinet Spokesperson, Minister Keheliya Rambukwella has informed the weekly Cabinet briefing that a paper submitted by Sri Lanka’s Prime Minister Mahinda Rajapaksa in his capacity as the country’s Finance Minister was approved to support more inflows.
“The period for SDAs has been extended every six months since they were introduced in 2020 and the Foreign Exchange Act of 2017 will be amended accordingly,” Rambukwella has been quoted as saying.
According to reports, the government had introduced SDAs last April to encourage remittances from Sri Lankans, dual citizens, and others to shore up reserves and the SDAs will be given higher-than-market interest rates to attract deposits.
The government had introduced the SDAs on 8 April 2020 to seek assistance for the national effort to overcome the effects of the Covid-19 outbreak in the country and in October, the Central Bank of Sri Lanka (CBSL) has stated that the total deposits in SDAs amounted to approximately US$ 272 million, according to local media reports.
In addition, considering the favourable effects of retaining such foreign exchange within the country, the government of Sri Lanka has permitted SDA holders, who wish to keep maturity proceeds of SDAs in Sri Lanka beyond the designated date of maturity, to renew and continue SDAs as normal deposits with authorised dealers, news reports further noted.
The funds held in SDAs so continued as normal deposits are to be eligible only for the interest rates offered by the authorised dealers for normal term deposits of the respective banks.
Upon maturity, such funds are freely convertible and repatriable outside Sri Lanka on any future date and permitted to be transferred into an Inward Investment Account or a Personal Foreign Currency Account, if the account holder is eligible to open or currently maintain such an account, reports added.
OSL take:
The attraction of funds by Sri Lanka’s Special Deposit Accounts is indicative of the level of confidence on the country’s economy and its growth potential. Sri Lanka’s economy has shown great resilience to external and internal challenges through the years and is already showing strong signs of returning to normalcy after facing the impact of the global Covid 19 pandemic. The island is fast becoming a business hub in the South Asian region given its geographical positioning in the Indian ocean and the many trade agreements as well as the trade concessions enjoyed by the country. Foreign businesses/investors could therefore explore business/investment opportunities in Sri Lanka.
| Article Code : | VBS/AT/20210409/Z_5 |