Colombo, Sri Lanka – 30 September 2026 – In a significant move towards strengthening the nation’s economic stability, Sri Lanka’s Committee on Public Finance (COPF) has officially approved Foreign Exchange Regulations Nos. 01 and 02 of 2026, alongside an Order issued under Section 22 of the Foreign Exchange Act. This pivotal decision, reached during a recent parliamentary session chaired by Hon. Member of Parliament Dr. Harsha de Silva, underscores the government’s ongoing commitment to prudent financial management.
The approval follows extensive discussions between COPF members and senior officials from the Central Bank of Sri Lanka (CBSL). These new measures are designed to refine the framework governing foreign investments, capital transfers by emigrants, and the overall management of foreign exchange outflows, all critical components in navigating the country’s economic landscape.
Key Regulations and Committee Deliberations
The Committee meticulously examined the provisions of the new framework, focusing on several crucial areas:
Foreign Exchange Regulation No. 01 of 2026: Overseas Investments
This regulation outlines the scope for persons resident in Sri Lanka to make foreign investments. The discussions centered on clarifying eligible investors, permissible investment sectors, and the applicable restrictions on transferring capital overseas. Emphasising the importance of fostering economic growth, the Committee also highlighted the need to create opportunities and provide necessary financial facilities for Sri Lankan companies aspiring to expand their business operations internationally.
Foreign Exchange Regulation No. 02 of 2026: Emigrant Asset Transfers
This segment of the regulations addresses the procedures and limitations applicable to emigrants seeking to transfer assets held in Sri Lanka overseas. Specific attention was given to the existing provisions for capital transfers under the Emigrant’s Allowance, as well as the remittance of current income such as rental income, interest, and dividends.
Order Under Section 22 of the Foreign Exchange Act: Managing Outflows
Officials from the Central Bank of Sri Lanka briefed the Committee on the temporary restrictions implemented through this Order. These measures are crucial for managing foreign exchange outflows and safeguarding the nation’s vital foreign exchange reserves amidst the prevailing economic conditions. Reassuringly, CBSL officials also informed the Committee that consideration is being given to gradually relaxing these restrictions as economic conditions continue to improve.
Addressing Concerns and Clarifications
During the comprehensive meeting, the Committee delved into various aspects, including the strategic utilisation of export earnings for overseas business expansion and the importance of providing robust facilities for local businesses to thrive in international markets. Discussions also touched upon ongoing investigations into unauthorised foreign exchange outflows and the mechanisms in place for monitoring and preventing such illicit activities. Measures taken to minimise discrepancies between banking and Customs data relating to imports and exports, along with the need for strengthened inter-institutional coordination, were also thoroughly reviewed.
Committee members expressed a collective concern that overly stringent or unnecessary regulations could potentially discourage legitimate business ventures and thereby hinder economic growth. Chairman Dr. Harsha de Silva specifically questioned a discrepancy in investment limits, pointing out that while the Regulations specified USD 2 million for the expansion of listed companies, the Order stated USD 0.75 million.
In response, officials from the Department of Foreign Exchange clarified that the USD 0.75 million limit would apply for a period of approximately six months, with a relaxation of this limit anticipated in 2027. They further confirmed that the corresponding limit for non-listed companies is USD 0.2 million. The Department of Foreign Exchange stated that foreign exchange exceeding these limits may be converted with the approval of the Monetary Board of the Central Bank of Sri Lanka, with such approvals being granted based on the business’s balance sheet. However, views were also expressed that businesses with higher asset levels might naturally have greater opportunities to obtain such approvals.
Participants in the Deliberations
The critical discussions involved a wide range of parliamentary members and key government officials. Amongst those present were Hon. Deputy Ministers Chathuranga Abeysinghe and Nishantha Jayawera, along with Hon. Members of Parliament Ravi Karunanayake, Ajith Agalakada, Nimal Palihena, Wijesiri Basnayake, Thilina Samarakoon, Champika Hettiarachchi, and Attorney-at-Law Lakmali Hemachandra. Representing various government entities were officials from the Ministry of Finance, Sri Lanka Customs, the Department of Trade and Investment Policy, the Department of Import and Export Control, and the Central Bank of Sri Lanka, including its Department of Foreign Exchange.
The approval of these Foreign Exchange Regulations and the accompanying Order by the Committee on Public Finance marks a proactive and methodical approach to economic governance. These measures are anticipated to provide a clearer, more predictable framework for both businesses and individuals, fostering a stable economic environment as Sri Lanka continues its journey towards sustainable development and prosperity.
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