2026-03-03 / Debate: Foreign Exchange Act Order under Section 22 of the Foreign Exchange Act, No. 12 of 2017 2026-03-03
## Summary
Deputy Minister Ariyarathne defended the government's economic management record while presenting a Regulation under the Foreign Exchange Act to relax capital outflow limits, raising business outward payment limits from USD 200,000 to USD 500,000 and personal foreign currency account limits from USD 20,000 to USD 25,000, reflecting improved foreign reserves of approximately USD 6.8 billion by end-2025 under the IMF programme. She cited January 2026 export and remittance data as evidence of economic recovery, while acknowledging risks from the Middle East conflict to oil prices, remittances, tea exports, and tourism. On cyclone relief, she confirmed LKR 25,000 payments had been largely completed for affected families, with further LKR 50,000 tranches in progress. She also outlined a LKR 47.6 billion fuel infrastructure investment, including LKR 31.9 billion for tank refurbishment and new construction to double storage capacity, and clarified that the President's "pawn shop" remarks referred to the inherited state of the economy rather than current policy.
Thank you, Mr. Deputy Speaker.
First, on the “pawn shop” remark: the Opposition misunderstood. The President meant the country had been run like a pawn shop; what he explained was how hard we have worked to turn that pawn shop back into a functioning country. On fuel infrastructure, we have already committed LKR 47.6 billion—details I will outline.
To an earlier point about the cyclone relief: payments of LKR 25,000 have been completed for the vast majority of affected families, with further tranches of LKR 50,000 progressing; the President personally launched reconstruction projects for destroyed houses in several districts.
Today we approve a Regulation under the Foreign Exchange Act. Since 2020, amid a balance of payments crisis, we imposed outflow controls as the economy slid into an abyss. Since 2023, under the IMF programme, and as our economy and reserves gradually strengthened, we began to relax capital outflow limits to facilitate business expansion abroad through foreign currency accounts. Accordingly, for business outward payments, the limit rises from USD 200,000 to USD 500,000; and for personal FCAs in respect of permissible capital transactions from USD 20,000 to USD 25,000.
By end-2025 we had built reserves to about USD 6.8 billion, not by shutting markets but by expanding the economy. On vehicles, despite initial concern, last year LCs of USD 1.8 billion were opened and around USD 1.2 billion worth of vehicles were cleared, yielding approximately LKR 904 billion in revenue in 2025; total customs revenue from vehicles was around LKR 2.25 trillion. This shows that opening the market prudently can finance social protection—such as significant allocations for cyclone relief.
Our budget priorities remain: eradicating rural poverty; free health and education; and public transport. With enhanced revenue we raised wages of public and private sector workers, including estate workers, and increased social assistance.
Latest data for January 2026: total goods and services exports were USD 1,883 million, up 7.1 percent year-on-year; remittances USD 751 million; tourism earnings USD 378 million; and a mobile account surplus of about USD 370 million. Yet the Middle East conflict poses external shocks: oil prices can rise; remittances may fall; 45–50 percent of our tea exports go to that region; about 60 percent of tourists arrive via the Middle East hubs. We are managing these risks.
On fuel security: had the tanks been refurbished earlier, our storage would be higher today. As the President said, we will increase tank capacity by 100 percent. We have allocated LKR 31.9 billion for tank refurbishment and new construction—within an overall LKR 47.6 billion package including pipelines. Some projects have commenced; some tenders are underway; others start this year. This is how you turn a pawn shop into a country. We hope, in line with international law, that the Middle East crisis will soon subside. We pray for global peace.
Thank you, Mr. Deputy Speaker.