Forex woes and silver bullet

Wednesday 23rd August, 2023

Justice Minister Dr. Wijeyadasa Rajapakshe has said, in an interview with Hiru TV, that Sri Lankan exporters have parked an eye-popping USD 100 billion overseas. His revelation has coincided with media reports that Sri Lanka is struggling to pay back a 200-million-dollar loan obtained from Bangladesh.

The abolition by the Yahapalana government of tough foreign exchange control laws in 2017 has stood unscrupulous exporters in good stead; they have been able to carry out their sordid operations without fear of being arraigned on criminal charges.

The Exchange Control Act of 1953, which had enough teeth to deal with forex racketeers strictly, was replaced with the Foreign Exchange Act of 2017, and criminal offences under the previous law were converted into civil ones for the benefit of some crooks facing legal action.

When the new Act took effect, criminal cases that had been filed previously lapsed, and legal action was not instituted against the offenders anew for obvious reasons; about 30 persons including the kith and kin of UNP and SLPP leaders benefited. The abolition of tough foreign exchange control laws must have made a significant contribution to the rapid depletion of the country’s forex reserves and the current economic crisis.

Racketeers continue to go places. On 14 August 2023, we published a front-page picture of some government politicians attending a meeting, where President Ranil Wickremesinghe discussed ways and means of developing the gem and jewellery industry and urged those engaged therein to help boost the country’s foreign earnings at least by USD 2 billion a year. Worryingly, among the government politicians present was MP Ali Sabry Raheem, who had been nabbed by the Customs, about three months back, with 3.5 kilos of gold and 91 smartphones and fined for smuggling. That the Customs gave MP Raheem kid-glove treatment and lowered the fine due to a government intervention is public knowledge. Legal action should have been taken against him for violating foreign exchange control laws; he should have been made to explain how payments had been made for the phones and gold he was carrying.

How can a government, which unashamedly shields the likes of Raheem and involves them in export promotion activities, be expected to hold racketeers at bay and improve the country’s forex inflow?

If at least 10 percent of the amount of unrepatriated export proceeds which, the Justice Minister himself says, are lying in offshore accounts, could be brought back, that would the proverbial silver bullet; the country’s foreign woes would vanish in next to no time, and there would be no need for bailout packages that always come with geopolitical strings attached.

Will the government care to launch an investigation, based on its Justice Minister’s statement, with a view to bringing back unremitted export proceeds? Most of all, it must restore the strong foreign exchange control laws introduced in 1953 and stop protecting racketeers if it is serious about shoring up the country’s foreign exchange reserves.