2026-03-03 / Debate: Foreign Exchange Act Order under Section 22 of the Foreign Exchange Act, No. 12 of 2017 2026-03-03
Hon. Ravi Karunanayake spoke in support of amendments to the Foreign Exchange Act of 2017, welcoming the increase in the outward investment limit from USD 200,000 to USD 500,000, but cautioning that due to inflation this represents limited real liberalisation and calling for further, prudent relaxation to enable Sri Lankan firms to invest abroad. He raised concerns about the quality of foreign reserves, arguing that the reported USD 6.5 billion includes volatile short-term "hot money" rather than durable holdings, and urged the Central Bank to broaden its focus beyond exchange rates and interest rates to encompass growth, employment, and foreign exchange generation. On energy, he advocated for accelerated investment in renewables and Battery Energy Storage Systems to reduce foreign exchange expenditure on fuel imports, particularly in light of global supply disruptions affecting oil and LNG prices. He also called on the government to seize the current opportunity to attract FDI through institutions such as the BOI and Colombo Port City, engage the IMF to facilitate tax incentives for investors, and address upcoming debt repayment obligations of USD 3.5–6.5 billion due by April 2028 through revenue generation and investment attraction rather than debt reprofiling alone.
Hon. Deputy Chairperson, I am pleased to speak at a time of significant domestic and international pressures.
We welcome moving ahead by amending the Exchange/Foreign Exchange Act of 2017. The outward limit that was USD 200,000 three years ago is now raised to USD 500,000. But what USD 200,000 could buy then may need USD 700,000–800,000 today. So the real effect is not necessarily liberalization. What matters is enabling genuine capacity to invest outward—not just nominal increases. Inward Investment Accounts are fine—they bring money in. Outward Investment Accounts allow Sri Lankan companies to invest abroad. After the Central Bank declared bankruptcy, outward flows were suspended; later they were allowed up to USD 200,000 and now USD 500,000. These should be liberalized further, prudently, to enable our firms to assess and invest abroad and bring benefits back.
To Government Members: please do not waste time re-litigating the past; that is why we are in Opposition. Get on with taking the country forward. Have you seen this Opposition leading strikes or processions? No. We are a responsible Opposition giving you space because we know how hard it is to govern, especially amidst war risks that hinder rather than help.
On energy, we asked why we are not accelerating renewables and Battery Energy Storage Systems (BESS). If we can generate power at Rs. 40 per unit, why pay Rs. 80, feeding mafias instead of saving foreign exchange? We saw this global risk coming—whether in the Middle East or elsewhere. If we can rely on our own energy resources—sun, wind, water—we need not spend precious FX.
On the Central Bank: the President said the Bank has been tasked with a situational assessment. While granted independence, it has not acted fully independently. Our reserves—said to be USD 6.5 billion—include “hot money” via short-term placements through commercial banks, not durable reserves. The rupee has swung from 310 to 313 per USD in a day; depreciation fuels inflation. The Central Bank must manage more than the exchange rate and interest rates—growth, jobs and FX generation must be in its sights.
Internationally, the Strait of Hormuz handles about 22% of global oil—roughly 14.2 million barrels per day of crude and 5.9 million of refined products. When flows halt, prices spike. Just days ago Brent was around USD 62.50; now it is about USD 89, with estimates of USD 100–120 ahead. LNG output disruptions in Qatar have pushed up LP gas prices by about 55%. We must plan our path forward under these headwinds.
Sri Lanka now has a good opportunity to attract FDI. For years we talked about increasing FDI; yet inflows remain weak. For the next two to three years, investors will be wary of the Middle East; let us seize the moment—through the BOI and Colombo Port City. But the agencies must market effectively. We also need to engage the IMF to ensure room for tax holidays and investment reliefs. Companies do not come because they “love” Sri Lanka; they come if returns are attractive.
On fuels, with multiple suppliers—RM Parks, Shell, IOC, CPC now among others—the burden on the state is reduced. When the Central Bank’s stance caused a de facto shutdown, only CPC could import; now several firms can, and vessels are arriving under that framework. That competitive regime was introduced by previous administrations, including the UNP. With Sinopec likely to join, competition will increase further.
On debt, by April 2028 between USD 3.5–6.5 billion may fall due when bondholder payments resume, in addition to USD 2–3 billion annually to multilaterals. This is not unpayable—if we raise investment and generate the income to service it. Do that rather than seeking only reprofiling. Let us bring in investment, build confidence and pay our way.