The Hon. (Dr.) Anil Jayantha - Minister of Labour and Deputy Minister of Finance and Planning

¶ 01 Hon. Presiding Member, thank you for the opportunity.

¶ 02 The regulation tabled under the Foreign Exchange Act, No. 12 of 2017, approved by Cabinet and presented for Parliamentary approval, reflects our current economic conditions and governance priorities.

¶ 03 When we assumed office, two areas were visibly in crisis: the external sector — a shortage of foreign exchange to import goods, service debt and enable investment — and public finance, where revenues were insufficient to sustain government operations. Restrictions were imposed on the external sector then. With this regulation, we signal the stability we achieved by 2025.

¶ 04 Key indicators reflect that stabilization, especially in the external sector. A country can maintain reserves in two ways: by compressing imports and external transactions — a crisis response which stunts growth and erodes confidence — or by opening the external sector prudently to expand the economy. We opted for the latter.

¶ 05 Previously, restrictions were eased via gazettes, typically valid for six months. The present regulation, by Extraordinary Gazette 2467/67, extends the existing liberalizations for a further six months and adds two key relaxations to support business expansion and investment:

¶ 06 - Business Foreign Currency Accounts (BFCAs): Prior to 2021 restrictions, exporters and investors had accumulated earnings. We now allow usage limits to increase from USD 200,000 to USD 500,000 specifically for investments — in equities, companies, and capital formation (including via employee schemes). The Central Bank will monitor through defined procedures.

¶ 07 - Personal Foreign Currency Accounts (PFCAs): The individual usage cap is increased from USD 20,000 to USD 25,000. Other prior relaxations remain, including remittances for transitional allowances via capital accounts.

¶ 08 Concerns about pressure on foreign exchange are addressed through data-driven prudence. Data show outflows under earlier relaxations were modest: USD 16.89 million (July–Dec 2024), USD 14.268 million (Jan–Jun 2025), and USD 37.03 million (Jul–Dec 2025). We expect higher, but productive, utilization now, aligned to business and capital expansion.

¶ 09 Across the banking system, balances in BFCAs and PFCAs amount to about USD 3.2 billion. We aim to mobilize a measured share of that for development.

¶ 10 On the broader external sector, Sri Lanka historically runs a merchandise trade deficit as imports of raw materials, consumer and capital goods exceed exports. We have managed the deficit by growing exports in tandem and are advancing diversification of products, markets and supply chains through EDB programs. Apparel leads exports, alongside tea and petroleum-related products.

¶ 11 On imports, fuel cost about USD 4 billion in 2025. Despite commentary unrelated to this item, based on external conflicts, on fuel queues and shortages, the President this morning provided detailed evidence: there is no fuel shortage risk; storage has been built up and expanded with requisite investments and capacity. There is no need for public fear. Manufacturing panic harms investment and poverty reduction efforts.

¶ 12 Tourism is a strategic sector for 2026; in 2025 it earned USD 3.2 billion. Workers’ remittances exceeded USD 8 billion in 2025 — the highest on record — strengthening reserves and enabling a positive current account balance of USD 1.7 billion in 2025, clear evidence of stabilization.

¶ 13 On vehicles, by end-2024, 52,986 LCs valued at USD 2,547 million were opened, with 450,735 orders placed; USD 1.9 billion had flowed out by 2025. Imports exceeded USD 2 billion in Sept–Oct 2025. These trends show forward movement without stalling growth.

¶ 14 On debt restructuring, our new bonds are trading near par in secondary markets — previously USD 100 bonds traded at USD 30–40; now near USD 100 — reducing costs and signaling stability to investors. The foundation is set to move from stabilization to investment attraction. Thank you.