Hoping for a tomorrow that’s better than today

May tomorrow be more than just another name for today
- Eduardo Gulliani

We definitely hope it will be so, but given the current crisis situation in Sri Lanka the chances of tomorrow being better or brighter than yesterday are quite remote indeed. 

Amid the rapidly escalating cost of living; the shortage of food and essential commodities such as milk powder; the prospect of a return to an era of long queues; the rise in fuel prices triggering a chain reaction and the overall economic downturn with the rapidly dwindling foreign currency reserves; the outlook, for Sri Lanka and Sri Lankans, in 2022 is bound to be bleaker than ever before. 

In the wake of the hundreds of containers piled up in the Colombo harbour unable to be cleared because of the dollar crunch, a weekend media report said Sri Lanka’s dollar crisis was even threatening tourism revival with industry sources warning those foreign carriers are reluctant to increase their flights with the likelihood of reducing them instead because the General Sales Agents (GSAs) and local airline offices had for months fallen back on their dollar payments to principals abroad.

 Sources have said these payments include a percentage of ticket sales or income from cargo space that in the past were remitted “instantly” to the principals in foreign currency. The travel industry’s warning comes amid last week’s customer communication from logistics company Maersk that “due to current US dollar unavailability in the market, we are facing challenges in making the freight collection and remittance on time to 
our principals”.

This poses serious challenges to the tourism industry despite the Government having invested heavily in tourist promotion. Some airlines, which had 12 flights a week, are now down to three. “If we go on like this, I fear some airlines might pull out,” a GSA source said. “We can’t pay on time and we can’t delay payments either. The Government must give us priority because we bring in revenue, we bring in tourists, we do the advertising and we sell Sri Lanka as a destination.”

Highlighting the crisis situation even further is the BBC report quoting Cabinet spokesman Ramesh Pathirana as saying that Sri Lanka plans to settle bills for past oil imports from Iran by exporting US$5 million worth of tea to that country each month to settle a US$251 million debt while a member of the Sri Lanka Tea Board said it was the first time in this country’s history that tea had been bartered to settle foreign debt.

Minister Pathirana claimed that this method of payment would not violate United Nations or American sanctions, because tea had been categorised as a food item on humanitarian grounds and that no blacklisted Iranian banks would be involved. But a spokesman for the Planters’ Association of Ceylon, which includes all the major plantation companies in Sri Lanka, said this mode of transaction was only a “[sticking] plaster solution by the government”. “It doesn’t necessarily benefit exporters as we will be paid in rupees, circumventing the free market, and provides no real value to us,” he said.

Meanwhile, Sri Lanka has to meet some US$4.5 billion in debt repayments next year, starting with a US$500 million international sovereign bond repayment in January. However, according to the latest data released by the Central Bank, Sri Lanka’s foreign reserves had dwindled to US$1.6 billion as at the end of November, notwithstanding Central Bank Governor Ajith Nivard Cabraal reportedly saying earlier this month that Sri Lanka is confident of “seamlessly” repaying all sovereign debt that would fall due in 2022. 

We conclude today’s column with excerpts from an article written by Dr. W.A. Wijewardena, a former Deputy Governor of the Central Bank and well-known economic affairs analyst. He says Sri Lankans may be hoping to welcome 2022 by looking beyond the hardships in the aftermath of the pandemic and the mismanagement of the economy, but there are no reasons to go overboard with optimism given the current circumstances ‘where the country is suffering from the hangovers of the government’s shortsighted and arbitrary policies of the past two years’.  

According to Dr. Wijewardena, Sri Lanka is stepping into the New Year with a ‘double whammy of acute liquidity shortages in both the foreign exchange and rupee markets, compounded by soaring consumer prices as a result of the Central Bank’s dovish monetary policy’. 

With so many hardships staring in the face of Sri Lanka and the people; there is little or nothing to look forward to in the New Year, and in such a scenario, can we earnestly expect tomorrow to be better 
than today?