Sri Lanka’s export sector is operating with around $6 billion in unrealised capacity, a shortfall that is straining the country’s external position and weighing on the rupee, according to a new Asian Development Bank brief.
If the gap were closed, exports could rise by as much as 47 percent, the ADB said. That lift would provide a critical buffer as external debt repayments begin to accelerate from 2028.
The bank said the need to purchase foreign currency to service upcoming debt is expected to pressure the rupee, while the Central Bank’s capacity to defend the currency remains constrained by limited reserves. As of December 2025, usable reserves covered only around three months of goods imports.
Nominal exports grew just 16 percent between 2015 and 2024, well below regional peers including Cambodia, India and Pakistan. The underperformance, combined with a post-war rise in imports, has widened the trade deficit and contributed to rupee depreciation.
Apparel is flagged as the largest single source of unrealised capacity, at $1.9 billion, followed by tea, spices and nuts. The ADB argues exports are also a driver of productivity and higher wages, with exporting firms typically adopting advanced technology and paying more than non-exporters.
The analysis lands as Sri Lanka grapples with a week in which the rupee effectively lost its spot foreign exchange market, and first-quarter merchandise and services exports totalled $4.3 billion under Hormuz-related shipping pressure. ADB’s latest growth forecast projects 4 percent GDP expansion for 2026 as Middle East tensions weigh on the recovery.
