Fixing forex issue fastest way to deal with power cuts, fuel shortages: CCC

• Urges govt. to address forex issue to restore electricity and fuel supply 
• Reiterates need to engage with IMF for a debt restructuring programme
• Says further recommendations to manage situation will be provided after consultations with relevant experts
• Fears power cuts and fuel shortages could hamper recent recovery seen in tourism, exports

The Ceylon Chamber of Commerce (CCC) yesterday expressed serious concern about the adverse effects brought on its members and all sectors of the economy in general as a result of the ongoing interruptions to the supply of electricity coupled with the frequent disruptions to the availability of fuel. 

“The chamber is of the view that these issues are all ramifications of the shortage of foreign exchange experienced by the country and believes urgently addressing the currency issue is the fastest way in which the power and energy issues can be tackled in the short term,” a CCC statement said. 

The CCC said it would soon provide further recommendations on what other actions are needed specifically on the power and energy sectors in the medium to long term in consultation with the relevant experts. 

As a first step in this direction, the CCC urged the government to commence a process of engagement with the International Monetary Fund (IMF) without any further delay to obtain its technical advice in managing the debt servicing as well as boosting foreign reserves.  

The CCC hopes that this engagement should result in a debt sustainability analysis being carried out by the IMF, which could pave the way for a pre-emptive debt restructuring programme. “It is the chamber’s belief that a systematic and methodical approach to restructure debt with the support of the IMF will help the government to successfully manage its external debt obligations while ensuring the availability of the much-needed foreign exchange to support vital economic activity. 

This could ensure the allocation of scarce foreign exchange reserves towards the purchase of essential supplies such as fuel for electricity generation, transport of goods and persons and other industrial purposes without holding it back for debt servicing,” the statement noted. 

The CCC also expressed fears that the recovery seen recently in the tourism and export sectors could be seriously hampered and economic growth slowed down unless urgent action is taken to eliminate the disruptions to the supply of electricity and fuel, which is threatening to cripple all sectors of the economy.  The CCC, on its own and together with other chambers, has on numerous occasions consistently advocated an engagement with the IMF since the beginning of the COVID-19 pandemic in March 2020.