Sri Lanka tightens curbs on foreign currency possession as protests continue

Colombo, May 19 (EFE).- The Central Bank of Sri Lanka announced on Thursday that it would limit the amount of foreign currency individuals can keep in cash to $10,000, with violators to be fined, even as the country continued to witness protests against the government’s mishandling of the severe economic crisis.

“The (the new move) will help us use that foreign currency to support essential imports,” CBSL Governor Nandalal Weerasinghe said in a press conference in Colombo.

Weerasinghe announced that the maximum foreign currency limit for individual possession had been reduced from $15,000 to $10,000.

The governor said that a period of three months would be granted for depositing the currency in bank accounts or converting it into Sri Lankan rupee, even as the local currency has touched its lowest value compared to the United States dollar.

Currently one dollar is being traded for 350 rupees, a figure that stood at 200 in early March.

After the expiry of three months, the violators would be punished by the authorities, Weerasinghe said.

“Economic activity is expected to be affected considerably by the ongoing supply shortages, energy-related issues, and social tensions, as reflected by several leading indicators,” the central bank said in a press release.

The country has been trapped in a spiral of inflation, which hit the record figure of 30 percent in April, while as per CBSL data, foreign currency reserves dropped to $1.8 billion in April, down from $1.93 billion a month earlier.

The prolonged economic crisis has led to widespread political unrest and violence, and on Thursday the police used tear gas and water cannons to disperse more than a thousand students who had gathered in Colombo to demand the government’s ouster.

“We are not scared of guns,” “we are not scared of bullets,” and “we are not scared of the government,” were some of the slogans raised during the protest, organized by the Inter-University Students Federation at the heart of the capital, close to the president’s office.

As the security forces moved in to disperse the gathering, the move resulted in a stampede and chaotic scenes, captured by local broadcasters.

The students were demanding the resignation of President Gotabaya Rajapaksa and Prime Minister Ranil Wickremesinghe, who recently replaced the president’s brother Mahinda Rajapaksa due to sustained pressure over the mishandling of the crisis.

“For months people in this country have been asking President Gotabaya Rajapaksa, Mahinda Rajapaksa, and this government to go. This was for a reason. Now the government is saying that there is no fuel in the country,” IUSF convener Wasantha Mudalige told reporters.

Mahinda Rajapaksa was forced to resign after violent political clashes left 9 dead, while hundreds were injured, with the government’s supporters being blamed for most of the violence.

Sri Lanka has been witnessing its worst economic crisis since gaining independence from the British in 1948, resulting in severe shortages of medicines, food and fuel for several months, a situation which has been aggravated by the lack of foreign currency for imports.

The authorities have been trying to negotiate a possible financial bailout with the International Monetary Fund, after temporarily suspending its foreign debt payments in April. EFE

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