Dec 27, 2021: Sri Lanka has announced the closure of three overseas diplomatic missions to protect its foreign exchange reserves, as the country’s central bank tightly controls the dollars needed to finance essential imports.

The Foreign Ministry said on Monday that the Sri Lankan High Commission in Nigeria and consulates in Germany and Cyprus would be closed from January.

The foreign ministry said, “The restructuring is undertaken with a view to conserving the country’s much needed foreign reserves and minimising expenditure related to maintenance of Sri Lanka’s missions overseas,”

The island’s tourism-dependent economy has been hammered by the coronavirus pandemic.

In March last year, the government imposed a massive embargo on imports to boost foreign exchange reserves, leading to shortages of essential commodities such as fuel and sugar. All three missions were closed on the same day that Sri Lanka’s central bank tightened restrictions on foreign currency remittances received by locals.

It ordered all commercial banks to hand over a quarter of their dollar revenues to the government, which is more than 10 percent. This means that banks will have fewer dollars to lend to private traders who are importing essential goods. Sri Lanka had only 1.58 billion in foreign reserves at the end of November, down from 7.5 billion since President Gotabaya Rajapakse took office in 2019.