Sri Lanka limits currency holdings amid crisis

Sri Lanka’s central bank said it would reduce the maximum amount of foreign currency individuals can own from $15,000 to $10,000 and penalize anyone who holds it for more than three months

COLOMBO, Sri Lanka — Sri Lanka will reduce the maximum amount of foreign currency individuals can own from $15,000 to $10,000 and penalize anyone who holds it for more than three months, the central bank said Thursday, as police fired tear gas and water cannons at thousands of students demanding that the government resign for failing to resolve the country’s economic crisis.

Students from the Inter-University Federation of Students attempted to march towards the presidential residence but were blocked by police in the commercial center of the capital, Colombo.

Central Bank Governor Nandalal Weerasinghe said people should place their excess foreign currency in a bank or convert it to local currency within two weeks. After that time, Central Bank officials and police will raid and anyone breaking the new rules will be fined, he said.

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

Protesters blocked major roads to demand petrol and fuel, and TV stations showed residents in some areas fighting over limited supplies.

Weerasinghe said black market bounties led people to hoard foreign currency.

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 is $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 nationwide power cuts of up to four hours a day because they cannot supply enough fuel to power plants.

The government has asked state employees not to go to work on Friday, except those needed to maintain essential services, due to fuel shortages.

Protesters have occupied the entrance to the president’s office for more than a month, calling for 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.

New Prime Minister Ranil Wickremesinghe said on Monday some $75 billion was urgently needed to help deliver essential items, but the country’s treasury is struggling to come up with even $1 billion.

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

The protesters hold Rajapaksa and his family – who have dominated almost every aspect of life in Sri Lanka for most of the past 20 years – responsible for the crisis.

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