The new directive, issued under the Central Bank of Sri Lanka Act, No. 16 of 2023, is officially titled the "Repatriation of Export Proceeds into Sri Lanka Rules No. 2 of 2026". Signed by Central Bank Governor and Chairperson of the Governing Board, P. Nandalal Weerasinghe, the rules are set to officially take effect upon receiving formal approval from Parliament. The measure further amends previous frameworks established in 2024 and earlier this year, introducing stricter administrative controls over how foreign currency residuals are handled by the banking sector.
Under the newly substituted Rule 4, direct exporters of goods who receive foreign currency earnings in Sri Lanka are required to convert the residual of those proceeds into Sri Lanka Rupees (LKR). This conversion must take place on or before the tenth day of the calendar month following the receipt of the funds. However, before converting the remaining balance, exporters are permitted to utilize their foreign currency earnings for specific authorized payments. These permitted expenses include current transactions related to the export business and associated one-month commitments, as well as the servicing and repayment of approved foreign currency loans, including one-month loan commitments.
Exporters are also allowed to utilize the proceeds to pay out dividends declared to non-resident investors and to pay salaries to expatriate employees who are foreign nationals or dual citizens, provided these actions align with the Foreign Exchange Act. Furthermore, funds can be withdrawn in foreign currency notes or transferred for business travel directly connected to the export trade. The regulations also permit exporters to invest up to 10% of their received export proceeds into foreign currency-denominated debt securities issued by the Government of Sri Lanka, or to make authorized foreign currency payments to indirect exporters of goods and services.
The revised framework similarly extends tight regulations to secondary beneficiaries within the export supply chain. Under the amended Rule 6, any indirect exporter who receives foreign currency payments from a primary exporter must follow a parallel conversion protocol. They are required to utilize those received funds strictly for the same authorized business transactions, debt obligations, employee payouts, or travel expenses allowed for direct exporters. Any remaining residual after these permitted expenditures must be mandatorily converted into Sri Lanka Rupees on or before the tenth day of the following month, reinforcing the government's efforts to regulate foreign exchange liquidity.
