The Hon. Nishantha Jayaweera - Deputy Minister of Economic Development

¶ 01 Hon. Deputy Speaker, the Rules under the Central Bank of Sri Lanka Act No. 16 of 2023 before the House concern bringing export proceeds into Sri Lanka. Previously, exporters had six months to repatriate proceeds and could keep them in foreign currency accounts up to about 100 days before converting to rupees. The amendment now reduces the time one may keep such proceeds before conversion—but not for all proceeds.

¶ 02 Exporters may deduct legitimate foreign currency needs before conversion: - Payments for importing raw materials for their exports - Scheduled foreign debt service - Wages for foreign employees paid in FX - Dividend payments in FX - Up to 10 percent to invest in Government Treasury instruments issued in foreign currency - Payments to foreign suppliers under accepted trade terms such as COD

¶ 03 After these deductions, any balance proceeds remaining beyond the 10th of the following month must be converted into rupees. The Central Bank brings this to minimize recent rupee volatility, driven largely by the ongoing Middle East crisis, which has raised our import bill—fuel, freight, premiums, and insurance. We are a heavily import-dependent country. Vehicle imports were reopened in 2025; we initially expected about US$ 1.2 billion, but LCs reached about US$ 2.2 billion by year-end and now stand near US$ 3.3 billion. These factors increased dollar demand and created temporary stress.

¶ 04 Despite this, macro data show stabilization in 2025 relative to 2026 to-date. Tourism dipped recently due to the Middle East situation, but May saw growth over May last year. Off-peak months—April, May, June—are typically lower; arrivals usually pick up from July. Worker remittances show clear growth: January 2025 US$ 573 million to January 2026 US$ 751 million; February 2025 US$ 548 million to February 2026 US$ 720 million; March 2025 US$ 693 million to March 2026 US$ 815 million; April 2025 US$ 646 million to April 2026 US$ 777 million. Exports too have shown growth over 2025 despite disruptions.

¶ 05 Regarding yesterday’s decision to replace the CESS on imported textiles with VAT, there is no cost disadvantage to exporters under SVAT. When a domestic supplier sells finished apparel or inputs to an exporter, VAT is charged, but the exporter receives the refund under SVAT. Therefore, the exporter’s cost is not increased.

¶ 06 In sum, despite short-term FX volatility, we are stabilizing the economy, improving fiscal outcomes and supplies, while meeting people’s needs.

¶ 07 Thank you.