By Asoka S. Seneviratne –

“The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify … into every corner of our minds.” — John Maynard Keynes, The General Theory of Employment, Interest and Money, 1936

Sri Lanka has moved a considerable distance from the foreign-exchange crisis of 2022. Macroeconomic stabilization has progressed, growth recovered to 5 percent in 2025, the current account recorded its third consecutive annual surplus, and gross official reserves reached about US$7 billion by the end of March 2026.

However, the latest IMF assessment in June 2026 emphasized that Sri Lanka remains exposed to external shocks. It stressed the importance of exchange-rate flexibility, continued reserve accumulation, prudent monetary policy, and the phasing out of balance-of-payments restrictions.

The fundamental question is no longer simply how Sri Lanka can accumulate more reserves, but rather: How can Sri Lanka create a permanent national mechanism that continuously generates, attracts, retains, and accumulates foreign exchange without recreating past monetary and external imbalances?. In other words, to move from perpetual IMF dependence and reactive shortage management to a homegrown, productive economy capable of (i) earning, (ii) attracting, (iii) retaining, and (iv) sustainably accumulating foreign exchange.

This article proposes the National FX Pathway Accelerator (NFXPA) as the next logical reform. It is not another government institution; it is an execution mechanism that connects existing institutions to accelerate the country’s entire foreign-exchange pathway.

From Managing FX Shortages to Building an FX-Generating Economy

Sri Lanka’s traditional approach to foreign exchange has been reactive. When reserves fall, attention turns to crisis management through import controls, emergency financing, and milking the same cow for extra milk, such as focusing on workers’ remittances,  debt restructuring, or IMF programs. These provide temporary relief—a bandage for the deep wound, not a cure.

Earned foreign exchange provides sustainable external capacity. Exports, tourism, services, remittances, and FDI are not separate sources of dollars; together, they constitute the country’s national FX-generating system. The NFXPA is designed to make that system work faster and more efficiently.

The External Window Is Still Fragile

According to the CBSL, total exports of goods and services reached about US$20.6 billion in 2025 (merchandise exports at US 7.1B), while workers’ remittances reached US$8.1 billion. Gross official reserves stood at approximately US$7 billion by end-March 2026 (around 3.8 months of imports).

The IMF projects gross official reserves rising to US$8.65 billion in 2026, US$11.78 billion in 2027, and US$13.94 billion in 2028.

Yet, global uncertainty and Middle East conflicts continue to impact energy costs, tourism, and reserves. Sri Lanka must use this current window of stability to build a permanent FX-generating architecture before the next external shock hits.

The Problem Is Not Only Quantity—It Is the Pathway

Foreign exchange enters through multiple channels: merchandise exports, tourism, IT/digital services, professional services, shipping, migrant remittances, FDI, international education, medical services, and diaspora investment.

Because these operate across separate institutions and frameworks, a fundamental coordination problem arises. Customs, tax administration, investment approvals, and regulatory agencies operate within isolated silos while the overall FX pathway remains fragmented.

The NFXPA asks: Where is the bottleneck in the national FX pathway, and how can it be removed immediately?

NFXPA Should Not Become Another Government Institution

Sri Lanka does not need another ministry, statutory board, or layer of paperwork. The NFXPA should be an execution and coordination mechanism operating through existing institutions:

Each institution retains its statutory responsibilities. The NFXPA simply identifies cross-institutional bottlenecks, assigns responsibility, establishes deadlines, and monitors results.

Five Accelerators Along the National FX Pathway

The NFXPA operates around five interconnected accelerators:

FX Generation Accelerator: Focuses on export diversification, higher-value manufacturing, IT/digital exports, tourism, and professional services, emphasizing net FX generation and productivity rather than gross values alone.

FX Inflow Accelerator: Makes entering the formal financial system cheaper and easier through competitive exchange rates, low transaction costs, and convenient digital channels for remittances and FDI.

FX Retention Accelerator: Reduces unnecessary FX leakages through improved productivity, energy efficiency, and domestic competitiveness—achieving competitive import substitution rather than protectionist suppression.

Reserve Accumulation Accelerator: Connects deliberate Central Bank FX purchases with monetary and liquidity management to build buffers without risking domestic credit expansion and inflation.

FX Productivity Accelerator: Measures net FX contribution relative to resources consumed:

From “Red Carpet” to “Single Window” to “FX Pathway”

The NFXPA is the logical extension of an integrated reform agenda:

RED CARPET   Attract investment.

SINGLE WINDOW   Accelerate approvals and implementation.

NFXPA   Accelerate FX generation and retention.

RESERVE ACCUMULATION   Strengthen external resilience.

SUSTAINABLE GROWTH

A National FX Dashboard and Market-Enabling Philosophy

Driven by outcomes rather than meetings, a National FX Dashboard would track monthly or quarterly indicators (exports, tourism, remittances, FDI, leakages, and reserves) following a clear structure:

Crucially, the NFXPA should not control markets. Markets must continue to determine prices and allocate resources. Its job is purely to remove friction—eliminating redundant approvals, bureaucratic delays, and excessive remittance costs.

A Practical 12-Month Implementation Programme

The Government can begin with a 12-month pilot without new legislation:

First 90 Days: Identify the ten largest FX-generating sectors and ten major institutional bottlenecks.

Months 4–6: Assign bottlenecks to existing institutions with strict deadlines.

Months 7–9: Launch the National FX Dashboard and begin public reporting.

Months 10–12: Measure results, evaluate net FX gains, and scale what works.

Conclusion

Sri Lanka’s 2022 crisis was a warning about structural vulnerability. It is customary that Sri Lanka’s traditional approach to foreign exchange has been reactive. When reserves fall, attention turns to crisis management through (i)  import controls, (ii) emergency financing, (iii)  milking the same cow for extra milk, such as focusing on workers’ remittances,  and (iv) debt restructuring or IMF programs. These provide temporary relief—a bandage for the deep wound, not a cure.

The country now has a rare opportunity to move from perpetual IMF dependence and reactive shortage management to a homegrown, productive economy capable of (i) earning, (ii) attracting, (iii) retaining, and (iv) sustainably accumulating foreign exchange.

The National FX Pathway Accelerator provides the missing link to make that transition permanent.

*The writer, among many served as the Special Advisor to the Office of the President of Namibia from 2006 to 2012, was a Senior Consultant with the UNDP for 20 years, and a Senior Economist with the Central Bank of Sri Lanka (1972–1993). He can be reached via asoka.seneviratne@gmail.com