The Committee on Public Finance recently took into consideration an Order inclusive of updated guidelines on outward investments, introducing increased thresholds for local companies to invest overseas and streamlining processes to facilitate cross-border expansion, the parliament stated in a press release issued yesterday (4).

The text of the press release: “The said Order under Section 22 of the Foreign Exchange Act, No. 12 of 2017 Published in the Gazette Extraordinary No. 2441/14 of 18.06.2025 was thus approved after due consideration.

These matters were discussed at the meeting of the Committee on Public Finance Chaired by Member of Parliament (Dr.) Harsha de Silva on 29.07.2025.

Under the new framework, the investment limit for listed companies has been raised from USD 500,000 to USD 750,000 and the limit for unlisted companies has been increased from USD 150,000 to USD 200,000. Companies seeking to invest beyond these limits can now borrow from foreign sources up to USD 2 million, with Central Bank oversight and any investment exceeding USD 2 million will require special approval.

All outward investments must be routed through a designated Outward Investment Account (OIA) in Sri Lanka before funds can be transferred abroad. The Central Bank of Sri Lanka has granted general permission to licensed banks to facilitate these transactions swiftly, ensuring companies can access opportunities without undue delays.

Officials who attended the meeting emphasized that these reforms aim to encourage Sri Lankan businesses, particularly in the technology and software sectors to pursue global expansion while maintaining oversight of capital flows. The changes come amid concerns that previous restrictions were prompting some firms to relocate overseas.

Speaking on the updated guidelines, Central Bank of Sri Lanka representatives assured that short-term supplier credit (DA terms) remains classified as a current account transaction, with no additional restrictions.

The Committee also took into consideration the Regulation made under Section 35 of the Public Debt Management Act, No. 33 of 2024 published in the Gazette Extraordinary No. 2443/14 of 30.06.2025. Approval for the Regulation was granted following a discussion at length.

The Committee reviewed cross-border letter of credit (LC) and de-registration requirements pertaining to the importation of vehicles. Moreover, the Committee also inquired on the suggested improvements to the Gambling Regulatory Authority Bill and e-commerce platform taxation and related matters.

Reviewing the Regulation under Section 35 of the Public Debt Management Act, No. 33 of 2024, State-Owned Enterprises (SOEs) will no longer have unrestricted access to international borrowing under the new frame work. They must now undergo stress tests using an IMF-introduced tool to qualify for sovereign guarantees from the Treasury. This mechanism determines risk premiums in addition to lender interest rates, making borrowing more expensive while promoting fiscal discipline among SOEs.

Officials further noted that, based on the Public Debt Management Act, Sri Lanka currently operates under a 7.5% of GDP borrowing ceiling, with approximately 5% of GDP already utilized. This leaves only 2.5% borrowing capacity for future growth and development financing.

The Committee also received an update on the cross-border letter of credit (LC) requirements for vehicle imports. Treasury officials informed the Committee that the Cabinet of Ministers has decided to re-export all vehicles imported under cross-border LCs, though this decision is currently under legal challenge, preventing further discussion.

They also discussed proposed improvements to the Gambling Regulatory Authority Bill, with the Committee advocating for the inclusion of the National Lotteries Board and Development Lotteries Board within the regulatory framework, emphasising that lotteries constitute gambling and should not be excluded.

The officials present also stated that concerns pertaining to e-commerce platform taxation has been resolved. They stated that operations are now flowing smoothly following earlier delays caused by the switch back to HS code-based taxation.

The meeting was attended by Deputy Minister Chathuranga Abeysinghe, Members of Parliament Ravi Karunanayake, Rauff Hakeem, and (Dr.) Kaushalya Ariyarathne.”