CB Governor demands tea traders to repatriate all of their foreign earnings
Central Bank Governor Dr Nandalal Weerasinghe has strongly demanded tea exporters bring their total export income into the country within a month in view of the current economic crisis in the country.
The scale of the unsavoury practice of not converting a chunk of forex earnings was once again came under scatching attack of the Central Bank Governor Nandalal when he addressed the Annual General Meeting of the Colombo Tea Traders Association recently.
He made this demand at a time Sri Lanka’s tea industry is going through tumultuous times in terms of production with crop levels plunging to near three-decades low as a result of arrogant and ill conceived decision of shifting to organic farming overnight.
The August crop of 18.27 million kilos is the lowest in 28 years and the first eight months production at 171.37 million kilos is lowest since 1996 according to Forbes and Walker Tea Brokers.
The Industry has been dragged into this situation by the disastrous policy decision of banning chemical fertilizer of forcibly ousted President Gotabaya Rajapaksa on the advice of stooge officials surrounding him, and other activists including a monk,claimed by speakers at the meeting.
However CB Governor Nandalal said that 180 days time will be given to bring income to the country while carrying out a business related to exports.
Even so, the Central Bank governor sternly stated that it does not mean that they will be given a loan for a period of 180 days for purchases abroad in the event of a balance of payments crisis in the country.
The Governor of the Central Bank further stated that if the exports are carried out, the money should be brought within a month and he personally does not want to submit administrative measures for this and he only wants to motivate for this.
He noted that it was a great problem somewhere, if the tea exporters used to extend the fullest benefit for foreign suppliers for a period of six months at a time where there was a difficulty in opening a letter of credit without paying an advance for the banking system.
From tea export earnings of an average US$ 100 million a month, at least $50 million is not being brought back to Sri Lanka.
Under the Repatriation of Export Proceeds into Sri Lanka Rules No. 5 of 2021, published by a gazette notice, the Central Bank made it mandatory for exporters to bring back foreign exchange earnings and convert to rupees.
Although forex reserves began to evaporate, exporters lobbied and the rules were tweaked, he said adding that the rule is that they (exporters) must bring their dollar earnings into the country.