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Significance of repatriation and conversion of export proceeds for external sector stability and overall financial system stability

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Sri Lanka’s merchandise export sector has shown a notable improvement in 2021 compared to the pandemic-affected 2020. As per the latest Customs data, export earnings have averaged US dollars 985 million during the eight months ending August 2021 compared to a monthly average of US dollars 837 million in 2020, while the average earnings have amounted to US dollars 1,064 million during June-August 2021. This is an appreciable development as the merchandise export sector (comprising diverse products) is the largest foreign exchange earner in most countries, including Sri Lanka.

Sri Lanka has had a trade deficit each year since 1977, and the gap between merchandise imports and exports is typically financed by other inflows to the external current account (such as tourism and other services inflows as well as workers’ remittances), and financial inflows (such as investments and borrowing).

In this background, some recent developments in the foreign exchange market have raised several concerns, particularly as some of these typical avenues of foreign exchange inflows have been affected due to pandemic-related pressures, as explained below:

a) Compared to the monthly average exports as reported by Customs (goods flow) of US dollars 985 million during the eight months ending August 2021, the monthly average repatriation of export proceeds during July/August 2021 has been US dollars 640 million as reported by banks (financial flow). Accordingly, there has been a significant gap of US dollars 345 million between these two figures. This observation therefore, raises the serious question as to whether exporters comply with the regulation on 100 per cent repatriation of export proceeds.

b) It also appears that due to an undue speculation on exchange rate movements, there has been a reluctance to convert export earnings during the period from January 2020 to July 2021, thereby limiting inflows to the domestic foreign exchange market, which situation has then resulted in a buildup of foreign currency deposit balances with the banking sector by a significant US dollars 1.9 billion. In addition, with low rupee interest rates, some exporters have found it more lucrative to borrow and import to meet their input requirements, leading to further tension in the domestic market.

c) As per the data available, it would also be noted that if there had been a 100 per cent repatriation and 100 per cent conversion of export proceeds, the monthly export foreign exchange flow into the domestic market would have been US dollars 985 million, and with the average expenditure on imports of US dollars 1,670 million, that would have resulted in a monthly average gap of US dollars 685 million. This could have been easily financed using other foreign exchange inflows into the country.

d) Based on the above past statistics in general, and the experience during July/August 2021 in particular, the monthly average gap between the conversions of export proceeds with an incomplete repatriation and expenditure on imports has been quite alarming.

It would also be fair to state that there is a necessity for a country to ensure that the foreign exchange generated through export activities are duly repatriated into the country and converted into its currency. In fact, many emerging market economies have repatriation and conversion requirements imposed on merchandise and services exports. Country experiences vary, and over time, with the buildup of a country’s foreign exchange reserves through such non-debt inflows, countries have also gradually relaxed these requirements. Regional economies such as Bangladesh, India, Indonesia, Malaysia, Nepal, Pakistan, and Thailand have export proceeds repatriation requirements currently in place varying from 3 months to 2 years of the export. Bangladesh, India, Pakistan and Thailand have repatriation requirements on both goods and services export proceeds, while in Nepal, Malaysia and Indonesia, the repatriation requirement is only applicable on goods exports. Bangladesh, India, Pakistan and Thailand have rules on conversion to respective local currencies in different percentages based on nature and the amount of repatriated export proceeds and their utilisation. Such repatriation and conversion requirements ensure the fulfillment of the demand for foreign currency, including intermediate and investment goods imports directly required by the export sector, as well as essential fuel and medical requirements of the country, which are indirect inputs to all sectors including the export sector.

Therefore, it would be reasonable for the Government (which supports the export sector through lower taxes and numerous other incentives) and the Central Bank (which is expected to deliver price and economic stability as well as financial system stability) to take steps to ensure the complete repatriation of export proceeds within a reasonable period and the conversion of inflows of export proceeds into the local currency, including the proceeds already accumulated in exporters’ accounts, so that the true purpose of exports is realised.

As would be well appreciated, an export would realise its objective only when it finally culminates in the flow of foreign exchange that is generated by the export into the country’s financial system in its local currency. That objective would obviously not be fulfilled if the final conversion of export proceeds into local currency does not take place. Accordingly, steps must be taken to strengthen the systems to ensure monitoring and to implement measures that lead to this objective. It is only then that the gap between the foreign exchange liquidity provided through exports and the foreign exchange liquidity demand for imports would reduce to the level as published in the Central Bank’s own reports.



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Birthday gift turned lifeline: US-based young environmentalist steps up for Sri Lanka

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Birthday becomes an act of compassion; Daham and Consul General Charith Yattegoda (R)

For Daham Perera, a December birthday celebration this year became something far more meaningful than cake, candles or gatherings with friends. Instead, it turned into a deeply personal act of solidarity with a country he calls his motherland.

Perera, a young environmental enthusiast based in Los Angeles, says his bond with Sri Lanka remains unbroken despite living thousands of miles away. “Although I live in America, my parents and all my relatives live in beautiful Sri Lanka. That connection is something I carry with me every day, he said.

Having visited Sri Lanka in August, Perera spent weeks traveling across the island, reconnecting with relatives and visiting historical and environmentally significant sites. “I saw the true beauty of Sri Lanka – its people, its biodiversity, and its rich heritage. Those memories are among the most beautiful in my life, he recalled.

That joy, however, was short-lived. Soon after his return, the devastating Ditwah cyclone struck the island, leaving a trail of destruction. Homes were damaged, livelihoods disrupted and families displaced. “When I saw images of my friends losing their homes, books soaked in mud, clothes ruined by floodwaters, I felt a pain I cannot put into words, Perera said.

As an environmentalist, the damage to Sri Lanka’s fragile ecosystems troubled him deeply. “Sri Lanka’s biodiversity is priceless. When disasters like this strike, it is not just people who suffer, but forests, wildlife and entire ecosystems that take years to recover, he noted.

With his birthday falling on December 9, Perera made an unconventional decision. “Normally, my father and I celebrate our birthdays by going to the temple and spending time with friends. But this year, celebrating didn’t feel right when my people were suffering, he explained. “I kept asking myself—what can I do, even from afar?”

The answer was simple but powerful. Perera chose to donate all the money he had saved for his birthday celebrations, along with additional contributions from his family, towards relief efforts in Sri Lanka. “Economic support at times like this is critical. Even a small contribution can help a family rebuild, restart a livelihood, or regain dignity, he said.

The donation was formally handed over to Sri Lanka’s Consul General in Los Angeles, Charith Yattegoda, at the Consulate premises. For Perera, the gesture carried deep emotional significance. “If I can replace my personal happiness with smiles on the faces of people back home, that is the most beautiful birthday I could ever celebrate, he reflected.

He describes the letter of appreciation he received in return as his most treasured gift. “That thank-you letter is not just paper. It is a reminder that loving your country means standing by it in its darkest moments. It will always remain one of the most meaningful keepsakes of my life, Perera said.

Perera hopes his story will inspire other young Sri Lankans living overseas to stay connected and give back. “Distance should never weaken our responsibility. Supporting Sri Lanka—its people, its economy, and its environment—is something we can all do, no matter where we live, he added.

In turning a birthday into an act of compassion, Daham Perera has offered a quiet but powerful reminder: sometimes, the greatest gifts are the ones we give away.

By Ifham Nizam

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John Keells Foundation partners Sri Lanka Police in combatting violence against women and children

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As part of its ongoing commitment to combat violence against women and children towards empowering a healthy and progressive nation, John Keells Foundation (JKF) continues to empower law enforcement agencies through Project WAVE (Working Against Violence through Education) – its flagship of over ten years – to combat gender-based violence and child abuse.

These activities include a strategic collaboration through which JKF supported the Sri Lanka Police to enhance their response to crimes involving women and children through the sponsorship of a global cutting-edge investigative software for use in the Cyber Investigation Unit (CIU) at the Bureau for the Prevention and Investigation of Abuse of Children and Women (BPIACW). The software enables officers to analyse and connect data efficiently, strengthening their ability to investigate and prevent online exploitation and related offences. BPIACW reported that the new platform had directly contributed to a significant and measurable improvement in their investigative capacity, recording the rescue of 22 children, the arrest of 21 suspects, and the filing of 111 cases in courts within the first year of its deployment.

Speaking on the partnership with JKF, Deputy Inspector General of Police – Ratnapura, and Former DIG – Children & Women Abuse Prevention 8 Investigation Range, Renuka Jayasundara said, “We extend our sincere gratitude to JKF for your steadfast partnership and for serving as a cornerstone of our efforts to strengthen child protection services through Project WAVE. Your contribution is making a tangible and quantifiable difference as evidenced by the growing numbers of successful investigations and legal referrals.”

Beyond technological support, JKF has also conducted a series of Train-the-Trainer (ToT) programmes, to improve the ability of officers to respond to GBV and CP in a sensitive and effective manner. The sixth such ToT was conducted from 24th to 26th of September 2025 for the benefit of nominated officers of the Homagama, Kaduwela and Maharagama police divisions. To date, 162 officers across 60 police stations have been impacted.

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SLANZBC appreciative of help from Australia and New Zealand

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Chandana Amaradasa; ‘appreciative of assistance’

The Sri Lanka Australia–New Zealand Business Council (SLANZBC) has extended its profound gratitude to both the Australian and New Zealand governments for the generous and timely assistance provided to Sri Lanka during the recent flood devastation.

Chandana Amaradasa, SLANZBC president, noted that both governments donated one million dollars each, in their respective currencies, at a critical moment for Sri Lanka — support that will play a significant role in helping communities rebuild their livelihoods.

The government of New Zealand has pledged NZ$1 million to support humanitarian relief efforts in Sri Lanka following Cyclone Ditwah.

This assistance will be channeled through an international

humanitarian partner to strengthen ongoing rescue and relief operations.

Similarly, the Australian government announced on November 30, 2025 that it will provide AUD 1 million in humanitarian aid to bolster Sri Lanka’s response to Cyclone Ditwah.

These compassionate and timely gestures, Amaradasa said, once again demonstrate the unwavering commitment of both countries to stand beside the Sri Lankan people in times of crisis. He also recalled that

Australia and New Zealand have consistently supported Sri Lanka, stepping forward during previous national emergencies as well.

Today’s humanitarian assistance further reaffirms the depth of these longstanding relationships and the true spirit of friendship that binds the nations — a bond built on mutual respect, shared values and enduring goodwill.

“Our association deeply appreciates this kind and meaningful support and remains committed to fostering even closer ties between the people of Sri Lanka, New Zealand, and Australia, he added.

By Hiran H Senewiratne

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