COPF raises concerns over new export currency conversion rules

The Committee on Public Finance (COPF) has reviewed a recent Central Bank of Sri Lanka directive that reduces the time allowed for exporters to convert their foreign exchange earnings into Sri Lankan rupees.

The issue was examined at a committee meeting held on June 9 chaired by Parliamentarian Harsha de Silva in the Parliament.

Central Bank officials explained that the measure was introduced in response to exchange rate fluctuations, foreign exchange market instability, and concerns over foreign currency liquidity shortages. They described it as a temporary policy designed to stabilise the rupee and improve the supply of foreign exchange, adding that the restriction would be eased once market conditions improve.

However, committee members cautioned that the decision could weaken market confidence and potentially increase volatility in the foreign exchange market.

The committee also endorsed the “Repatriation of Export Proceeds into Sri Lanka Rules No. 2 of 2026,” published in Extraordinary Gazette No. 2492/10 on June 9 under the Central Bank of Sri Lanka Act.

Under the new framework, exporters must convert any remaining foreign exchange earnings into Sri Lankan rupees by the 10th day of the following month, after using the funds for permitted transactions.

This effectively replaces the previous three-month conversion window introduced in 2024, significantly shortening the period exporters can hold foreign currency earnings.