• A joint chamber statement issued urges govt. to announce plans with certainty to overcome current forex crunch
• Wants immediate remedial action to rectify current foreign exchange shortage
• Insists govt. explore possibility for IMF assistance, if funding lines outlined in CB’s road map are not materialising 
• Warns that local biz will look to relocate their operations overseas, if situation doesn’t improve

The authorities were urged yesterday to take immediate remedial actions to rectify the current foreign exchange crunch faced by Sri Lanka, as the country’s private sector appears to be running out of patience with the government’s mishandling of the situation.

A joint statement issued to the media by the country’s leading trade chambers, led by premier business chamber Ceylon Chamber of Commerce, highlighted the negative implications of the current shortage of foreign currency in the country on businesses, importers and exporters. 

The statement urged the government to immediately finalise at least a few of the swap and credit lines mentioned in the six-month road map of the Central Bank, presented on October 1 and announce them with certainty.   

A press conference, which was supposed to be held this morning with the participation of Treasury Secretary Sajith Attygalle and Central Bank Governor Ajith Nivard Cabraal, to appraise the current situation and communicate the possible remedial actions taken by the authorities, was cancelled without prior notice. 

“While appreciating the efforts being taken by the government to mobilise short-term funding from a number of sources by way of swaps and credit lines, 

we urge the government to finalise the negotiations on some of these arrangements and announce them with certainty as soon as possible, with a clear indication when such facilities will become available,” the statement said.  If these actions, as envisaged by the recently announced road map by the Central Bank of Sri Lanka, are not materialising within the anticipated timeframes, we earnestly request the government to reconsider other alternative courses of action available to the country, such as engaging with the IMF, to explore the funding options they can offer,” it added. Explaining the difficulties faced by the broader private sector, the statement said businesses are struggling to find foreign currency to finance the much-needed imports.

“At present, we face the difficulties in obtaining foreign currency to finance the much-needed imports, due to the prevailing situation with regard to the lack of availability of foreign currency.  These range from not being able to obtain letters of credit to the inability to clear goods that have already arrived in the port, due to the delays experienced in honouring letters of credit. Further, this impact is also felt by indirect exporters and firms providing support services for exports,” the statement noted.

Due to the current situation, the statement also pointed out that the importers could experience immense financial costs in the form of demurrage and other logistics-related costs and their longstanding relationships built with suppliers could experience irreversible loss of confidence. 

“The importers are also unable to secure orders, due to the inability to agree on a firm payment schedule as required by suppliers. This will seriously impede the availability of essential products, especially during the upcoming festive period, during which consumer demand is typically high for most products. This can cause great hardship to the public at large and may result in a significant increase in the cost of living,” the statement added. 

Highlighting the risks to multiple sectors, the statement also cautioned that the banking system would face difficulties as a result of not being able to meet the needs of their longstanding customers and could eventually experience a serious loss of reputation, if they are compelled to dishonour the committed payments. 

“The government will also experience a loss of revenue, due to a drop in import duties, at a time when increasing government revenue is of paramount importance.” Meanwhile, the statement stressed that if the current situation doesn’t improve, local businesses will look into relocating their operations overseas, which will further hinder Sri Lanka’s ability to attract foreign direct investment.  “Therefore, we wish to urge the relevant authorities in government to take quick remedial action to avoid the negative consequences as outlined above and put Sri Lanka back on track to stage a strong post-pandemic recovery to reach vistas of prosperity and splendour as envisioned,” the statement concluded.