Sri Lanka on Tuesday appealed to exporters to speed up repatriation of earnings as a foreign exchange shortages bites and authorities scramble to source U.S. dollars to release food containers from ports and fund imports.
The government at the end of August announced emergency regulations empowering authorities to seize stocks of staples and sell them at guaranteed prices to tackle a food crisis.
Cabinet co-spokesman Ramesh Pathirana acknowledged the crisis in the island nation and said the government had decided to release $53 million to clear urgently some 800 containers of food stuck in port.
The government would also import 100,000 tonnes of rice from Myanmar to offset shortages but it this week stopped short of approving price increases for milk powder, gas, wheat flour and cement.
“The finance minister has held several rounds of discussions with exporters. Some exporters are reluctant to repatriate their earnings because they expect the dollar to appreciate further,” Pathirana told a weekly briefing.
“But we have requested that they repatriate their earnings quickly to assist us and our expectation is they will comply.”
The central bank recently estimated exporters had failed to repatriate $2.7 billion in the first eight months and cited the July/August gap as “quite alarming”.
The monetary authority also defended regulations introduced in May to make it mandatory for exporters to repatriate 25% of earnings within a month and proposed new measures be taken to increase prompt repatriation.
Exporters, however, argue that they need ready access to dollar earnings to pay for raw materials and deal with escalating shipping costs. They are also worried that any delays in accessing dollars due to foreign exchange shortages would result in them losing buyers.
“Sri Lankan exporters already operate on very thin margins and we cannot absorb currency conversion costs on top of that,” National Chamber of Exporters chief executive Shiham Marikar told Reuters.
“If the government wants higher conversion and repatriation rates then it needs to come up with a system for us to get quick access to dollars to pay suppliers and meet expenses”.
Even with the release of containers of sugar, spices and lentils, consumers are expecting shortages to continue until the government can source adequate dollars to import essentials as prices of commodities rise in global markets.