The EDB is of the view that the funds can be maintained in foreign settlement systems for usage by local players. EDB Chairman Suresh de Mel noted that there were long-standing issues with foreign currency leakage from the economy.
De Mel said, “We must admit that a lot of the foreign exchange doesn’t come to Sri Lanka. It is staggering. The Private Sector has to answer.” De Mel was of the view that the current currency impediments would be reduced in the coming months. The EDB was actively encouraging exporters to remit their funds. De Mel noted that a large issue currently facing exporters was the inability to pay for imported intermediate goods used in production.
De Mel was speaking on June 22 at the Royal Colombo Golf Club at the AGM of the Sri Lanka USA Business Council.
De Mel added, “Take gems and jewellery. Everybody knows about it but there is nothing they do about it. The gem and jewellery business in Thailand is done on our gems.” De Mel acknowledged that historically very little had been done to ensure that capital controls were implemented in Sri Lanka.
De Mel said, “Be responsible, part of the problem is that we all talk about policy but this is the whole political system. This can’t change overnight. We have to do small things quickly.”
De Mel praised the current government that was attempting to change the system. He said, “The Ministers are talking about it in various task forces and fora where we are making representations on this.”
De Mel noted as an incentive for people with access to dollar liquidity and the current rating hierarchy the government is allowing institutions to borrow internationally and lend to the government at a higher rate of interest.