Amidst the financial crisis, Sri Lanka has initiated a banking collaboration to enhance its tourism sector to boost the flow of foreign exchange into the country.
The Sri Lankan embassy in Russia has initiated cooperation between Sri Lanka’s Peoples bank and Russia’s National Investment Industrial Bank (NIIB).
Through this collaboration, Russian tourists can make their payments seamlessly in Sri Lankan Rupee itself in Sri Lanka.
How does it work?
Without any intermediate banks, these two national banks can make the transactions mutually possible based upon a liaison. This collaboration will come to effect from November 21, this year.
To proceed with this scheme, Tourists should have a Personal Foreign Currency Account (PFCA) in NIIB, Russia.
Russia and Sri Lanka
The PFC account holder can remit the amount that they wish to spend in Sri Lanka as Russian Rubles (Russian Money).
Customers arriving in Sri Lanka on direct flights (Aeroflot and Azur Air) can collect activated Debit Cards from the People’s Bank counter at the Airport.
Debit cards will be made available for collection for customers coming in Aeroflot/Azur Air, only for those who have completed the given Google Form.
For those who are travelling via transit, upon landing in Sri Lanka, they can visit a Branch of People’s Bank and request to issue a Debit Card, the embassy’s official website states.
Also, arrangements are in progress to make the card not only for Sri Lanka payments but also to make payments out of the Russian federation region.
Srilankan country economy is also referred to as the ‘triple T’ economy’ because of its huge dependency on Tourism, Tea and Textile industries of the country.
According to the latest data from the World Bank, Sri Lanka lost access to international financial markets in 2020 after credit rating downgrades. And without market access, Sri Lanka continued to service its external debt and pay for imports using official reserves and loans from the banking sector.
Also, the Official reserves dropped from US$7.6 billion in 2019 to less than US$400 million (excluding a currency swap equivalent to US$1.5 billion with China) in June 2022.
The net foreign assets in the banking system also fell to US$ -5.9 billion in June 2022, World Bank overview on Sri Lanka states.
Due to the lasting political turmoil and the financial crisis, the country had been suffering from a notable food and price hike plight from which the country is still toiling to solve completely.
With the collaborative schemes of WB and IMF Sri Lanka is progressing to recover from its financial crisis. At this Juncture, the Srilankan government has been hoping that this ease of doing banking activity may attract more Russian visitors to Sri Lanka and enhance the flow of foreign exchange in the country.