Sri Lanka’s top business chambers urged the government to seek the support of the International Monetary Fund (IMF) as the forex crisis deepens pushing some businesses to consider relocating and damaging the reputation of the country’s banking sector.
“If these actions as envisaged by the recently announced Roadmap by the Central Bank of Sri Lanka are not materializing within the anticipated time- frames, we earnestly request the Government to reconsider other alternative courses of action available to the country such as engaging with IMF to explore the funding options they can offer,” key business chambers issuing a joint statement urged the government.
The Chambers warned that if the government fails to address the current crisis, some local businesses would relocate to other destinations.
“If these conditions that are critical for ease of doing business do not improve, we are concerned that it will result in many local companies looking to relocate their business operations overseas. It will also seriously constrain our ability to attract Foreign Direct Investment(FDI) into the country. Therefore, we wish to urge the relevant authorities in the Government to take quick remedial action to avoid the negative consequences as outlined above and put Sri Lanka back on track to stage a strong post-pandemic recovery to reach vistas of prosperity and splendor as envisioned,” they pointed out.
The Chambers were also cautious of a further increase in the cost of living to the public translating from a shortage of goods due to the ongoing forex crisis.
“At present we face difficulties in obtaining foreign currency to finance much-needed imports due to the prevailing situation with regard to the lack of availability of foreign currency. These range from not being able to obtain letters of credit to the inability to clear goods that have already arrived in the port due to delays experienced in honouring letters of credit. Further, this impact is also felt by indirect exporters and firms providing support services for exports. We are
concerned that while the importers themselves will face immense financial costs in the form of demurrage and other logistics-related costs, it will also affect longstanding relationships built with suppliers resulting in a serious and irreversible loss of confidence. Importers are also unable to secure orders due to the inability to agree on a firm payment schedule as required by suppliers. This will seriously impede the availability of essential products especially during the upcoming festive period during which consumer demand is typically high for most products. This can cause great hardship to the public at large and may result in a significant increase in the cost of living,” they said.
The Joint Statment also highlighted the risks for the country’s banking system due to prevailing crisis.
“The banking system will also face difficulties as a result of not being able to meet the needs of their longstanding customers and could eventually experience a serious loss of reputation if they are compelled to dishonor committed payments,” it stated.