Sri Lanka’s export community is raising serious concerns over a newly introduced foreign exchange regulation that significantly shortens the period exporters can retain their foreign currency earnings, with industry representatives questioning both the timing and the process behind the decision.
The controversy emerged after the Central Bank issued a Gazette Extraordinary requiring exporters to convert foreign currency proceeds held in designated accounts by the tenth day of the following month. While exporters have reiterated their commitment to repatriating export earnings in line with national regulations, many argue that the new requirement was imposed without adequate consultation with the very sector it directly affects.
The National Chamber of Exporters (NCE) has expressed concern that no meaningful discussions were held with exporter associations, industry councils, or stakeholder organizations before the regulation came into effect. Sector leaders say they remain uncertain whether export promotion agencies or economic policymakers conducted a comprehensive impact assessment before introducing the measure.
The issue comes at a time when Sri Lanka’s export sector is showing positive momentum. During the first four months of 2026, total exports reached nearly $5.8 billion, reflecting growth compared to the same period last year. Merchandise exports alone recorded a year-on-year increase, reinforcing the sector’s role as a crucial contributor to the national economy and foreign exchange earnings.
Exporters argue that retaining foreign currency balances is not merely a preference but an operational necessity. Many businesses rely on these funds to purchase imported raw materials, machinery, spare parts, and production inputs. Foreign currency reserves are also essential for overseas marketing campaigns, supplier payments, and meeting contractual obligations denominated in foreign currencies.
Industry representatives warn that forcing businesses to convert earnings within a compressed timeframe could create disruptions in production planning and financial management. Many export sectors operate according to seasonal procurement and manufacturing cycles, meaning foreign currency earned today may be required several months later to fulfill future orders.
A major concern revolves around the financial burden created by repeated currency conversions. Exporters fear they may be forced to convert earnings into rupees and later repurchase foreign currency when payments become due. Such transactions expose businesses to exchange rate fluctuations, banking spreads, and additional transaction charges, all of which increase operational costs and reduce competitiveness in international markets.
Companies with foreign currency loans face another challenge. Many currently retain export earnings to meet future debt obligations. Under the new framework, they may need to repurchase foreign exchange later at potentially higher costs, increasing financial risk and cash flow pressures.
The NCE maintains that foreign exchange management measures are most effective when developed collaboratively with affected industries. Exporters say they support national economic objectives but believe policies intended to strengthen foreign reserves should not inadvertently weaken one of the country’s most important foreign exchange-generating sectors.
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