Amidst a US dollar shortage crippling the economy and causing social unrest, remittances, Sri Lanka’s largest foreign exchange (FX) earner since 2009, saw earnings fall for the twelfth consecutive month to last month, Central Bank of Sri Lanka (CBSL) data showed.
The reason for this is CBSL instituting a controlled exchange rate (ER) regime since 28 April 2021, complemented by artificially inflating the rupee value in the ER to control cost-push inflationary pressure and show the Government’s external debt in rupee terms of being at a lower value.
But this has spawned a grey economy, causing leakages of badly needed dollars. Subsequently, worker remittances last year over 2020 declined by 22.71 per cent (USD 1,613 million) to USD 5,491 million, data showed.
To rectify this error, CBSL, belatedly in March 2022, sharply devalued the rupee and subsequently free floated it. But to prevent a sharper fall of the rupee, CBSL since 13 May 2022 allowed the market ER to operate within a band, compared to a rigid, official ER which came into being for nearly 12 months from 28 April 2021 to 7 March 2022, before steeply devaluing it on 8 March 2022. Despite these changes, progress from attracting remittances from the informal to the formal sector has been slow.
Subsequently garment exports in the 11 months to April 2022 was greater by USD 1,757.96 (47.81 per cent) over remittances, with the former fetching USD 5,435.1 million; compared to the latter’s USD 3,677.14 million), according to latest CBSL data. Garment exports have been Sri Lanka’s second largest FX earner since 2009. Prior to that, from 1986 to 2008, garment exports were Sri Lanka’s largest FX earner. Tea, in the two years to last year has been Sri Lanka’s third largest FX earner, unseating tourism, which was Sri Lanka’s number three FX earner from 2013 to 2019.
To spur remittances to bridge the dollar deficit, the Cabinet this week raised the minimum age for migrant domestic female workers to 21, from the previous 25 years to Saudi Arabia, 23 to all other Middle Eastern countries and sticking to 21 years for the rest of the world, Ceylon Today reported. The minimum working age within Sri Lanka however is 16 years. Therefore, having two systems of minimum age limits for work is bad in law.
Meanwhile, the Government has encouraged migrant workers to obtain the much needed dollars. In this connection, Ceylon Today in an article published 15 June said, “Considering the prevailing economic situation, the Cabinet approved to issue circulars amending the existing provisions to enable public officers to take no-pay leave for a period of five years without affecting their seniority and pension for employment or assignments abroad.
Under existing provisions, a public officer is entitled to a maximum of five years no-pay leave for studies or foreign employment. But public officers were not keen on taking such leave due to non-inclusion of that period in the calculation of pensions, impact on seniority and other conditions of employment.”
Further, a news website, in an article published on 25 May, quoting President Gotabaya Rajapaksa said, in the face of the current economic setback, special attention should be paid to generating FX as well as seizing foreign employment opportunities.
Led by economic deprivation and in search of a better life and/or work overseas, droves of people, countrywide are swarming the Immigration and Emigration Department (IED) Headoffice, Battaramulla and its branch offices nationwide, to obtain passports either to migrate or to work abroad, but find that they have to languish for days with no passport in sight.
The Department as an excuse says that this is because their employees are languishing in queues to buy essentials, hence, being unable to attend to their work, or even if available, being not in a fit State to serve the public efficiently and expeditiously. These are inexcusable excuses. IED employees are paid by the taxpayer to serve the taxpayer. Immediate disciplinary action should be taken to check such errant employees.