Sri Lanka Parliament committee approves foreign exchange rules amid outflow controls
The Committee on Public Finance has approved Sri Lanka’s Foreign Exchange Regulations Nos. 01 and 02 of 2026 and an Order issued under Section 22 of the Foreign Exchange Act, following discussions on overseas investments, emigrant fund transfers and controls on foreign exchange outflows.
The regulations and Order were considered at a recent meeting of the Committee on Public Finance in Parliament, chaired by MP Dr. Harsha de Silva.
The Committee examined provisions covering foreign investments by Sri Lankan residents, transfers of funds overseas by emigrants and measures currently used to control foreign exchange outflows.
Under Foreign Exchange Regulations No. 01 of 2026, the Committee discussed who is eligible to make investments overseas, the sectors in which such investments can be made and restrictions on transferring capital abroad.
Members also discussed opportunities for Sri Lankan companies to expand their businesses overseas and the financial facilities needed for such expansion.
Foreign Exchange Regulations No. 02 of 2026 covers procedures and restrictions applying to emigrants who transfer assets held in Sri Lanka overseas.
The Committee was briefed on provisions governing the transfer of capital under the Emigrant’s Allowance and the overseas remittance of current income, including rental income, interest and dividends.
The Committee also considered the Order issued under Section 22 of the Foreign Exchange Act.
Central Bank officials said temporary restrictions are currently in place to manage foreign exchange outflows in view of prevailing economic conditions and the need to safeguard the country’s foreign exchange reserves.
They said consideration is being given to gradually relaxing these restrictions as economic conditions improve.
The Committee also discussed export earnings brought into Sri Lanka during the previous year and the possibility of allowing exporters to use part of those earnings to expand their businesses overseas.
Members highlighted the importance of providing local businesses with the facilities needed to enter and expand in international markets.
Attention was also given to investigations into unauthorised foreign exchange outflows and the mechanisms used to monitor such transactions.
The Committee discussed measures to reduce discrepancies between banking and Sri Lanka Customs data relating to imports and exports, as well as the need for stronger coordination among relevant institutions to prevent the misuse of foreign exchange.
Restrictions affecting bank guarantees and other financial facilities needed by Sri Lankan companies, including construction companies seeking business opportunities overseas, were also discussed.
During the meeting, members warned that unnecessary regulations could discourage businesses and risk slowing economic growth.
Committee Chairman Dr. Harsha de Silva said restrictions on foreign exchange outflows could also reduce the amount of foreign exchange flowing into Sri Lanka.
He also questioned why the Regulations referred to a limit of USD 2 million for the overseas expansion of listed companies while the Order specified a lower amount of USD 0.75 million.
Officials of the Department of Foreign Exchange said the USD 0.75 million limit would apply only for approximately six months and that consideration would be given to relaxing the limit in 2027.
They said the corresponding limit for non-listed companies is USD 0.2 million.
The Department said foreign exchange exceeding these limits could be converted with the approval of the Monetary Board of the Central Bank of Sri Lanka.
Officials explained that such approval would be considered based on the balance sheet of the business. However, views were also expressed during the discussion that companies with higher asset levels could have greater opportunities to obtain such approval.
Deputy Ministers Chathuranga Abeysinghe and Nishantha Jayawera attended the meeting along with MPs Ravi Karunanayake, Ajith Agalakada, Nimal Palihena, Wijesiri Basnayake, Thilina Samarakoon, Champika Hettiarachchi and Attorney-at-Law Lakmali Hemachandra.
Officials representing the Ministry of Finance, Sri Lanka Customs, the Department of Trade and Investment Policy, the Department of Import and Export Control, the Central Bank of Sri Lanka and its Department of Foreign Exchange also participated.