Ahoy! Good news
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The three friends had gathered under the margosa tree and were discussing about returnees from West Asia amidst the COVID-19 pandemic. “Mata hari santhosai mage yaluwo dennek pita ratin Lankawata giya sumane apu nisa. Hariyata duk vindala thiyenawa padi nethuwa. (I am happy that two of my friends from West Asia returned to Sri Lanka last week. They had been suffering abroad without proper pay),” said Kussi Amma Sera. “Eh gollo den nirodayanaya wenawa athi ne (So they must be in quarantine),” asked Serapina. “Ow, sumana dekak, ita passé gedera thawa sumana dekak. Evunata prashnayak ne (Yes, two weeks in quarantine, then two more weeks in home quarantine, but they are ok),” replied Kussi Amma Sera. “Eka prashnayak thama pita ratin aapahu ena kattiya goda denekta vairasaya bo wela thiyena eka. Me arbudaya kavada evara weida danne ne (One of the problems is that many of the returnees are infected by COVID-19. I don’t know when this crisis will end),” said a worried Mabel Rasthiyadu.The good news this week is that despite mounting problems faced by Sri Lanka’s migrant workers abroad, worker remittances rose in July, according to the latest data released by the Central Bank. Worker remittances rose by 12.2 per cent in July 2020, year-on-year, to US$702 million. However, on a cumulative basis, these remittances declined by 5.5 per cent to $3,682 million during January–July 2020 compared to the corresponding period of 2019. With more workers returning, the level of remittances in 2020 is certain to be lower than in 2019.
The level of gross official reserves of the country increased to $7.1 billion by end July owing to the receipt of the SAARCFINANCE swap facility from the Reserve Bank of India. “Net inflows to the domestic foreign exchange market eased the pressure on the exchange rate and enabled the Central Bank to absorb foreign exchange on a net basis to build up gross official reserves,” the bank said when releasing its July data.
The other bit of good news (Sri Lanka is starved for good news these days with COVID-19 casting a shadow over the country’s economy), is that earnings from merchandise exports continued to increase to $1,085 million in July from $894 million recorded in June 2020, with the gradual recovery of both domestic and global supply and demand chains and efforts by the government to support the export industries. On a year-on-year basis, earnings from merchandise exports recorded a growth of 8.7 per cent in July, with the Central Bank saying that this positive growth observed for the first time since February 2020 came from increased earnings from all three major categories of exports – agricultural, industrial and mineral exports.
As I moved away from the office window, watching the trio in conversation, the phone rang. It was my jolly-mood economist friend, Sammiya (short for Samson) on the line, most probably wanting to discuss an economic issue. “Hello Sammiya, what’s happening,” I asked in a welcoming tone. “Oh, I was going through the Central Bank economic data for July 2020 and find that the economic situation may have improved,” he said.
“Agreed this is a silver lining in the misery of the previous months that Sri Lankans have had to endure amidst COVID-19,” I said. “I hope this trend will continue,” he said and then we indulged in a long conversation on a variety of topics including the extended ban on imported vehicles and the 20th amendment to the Constitution, which is certain to be passed in Parliament with the ruling party having a steamroller majority.
However, not everything was hunky-dory this week. According to the Export Development Board (EDB) this week, Sri Lanka’s exports last month (August) recorded a downfall of 19.2 per cent to $947.7 million compared to $1,033.3 million recorded in the same month of last year. Despite the decline in exports, the EDB said some products like coconut-based products, electrical and electronic components, spices and essential oils and food and beverages recorded positive growth.
EDB Chairman Prabhash Subasinghe was quoted as saying that it was still remarkable for Sri Lanka to achieve another month of almost a billion dollars of exports. “However, we are being watchful of the months ahead whilst understanding the impact of COVID-19 on our key markets of US and Europe. We also need to focus on export product and market diversification which is seriously lacking today,” he said, in a statement.
While the positive news is that exports are picking up, some companies in the export sector like Hayleys are showing good results. In the first quarter (April-June) of the 2020-21 year, Hayleys recorded a pre-tax profit of Rs. 1.17 billion compared to a profit of Rs. 285.26 million in the corresponding quarter of 2019/20. “The improvement in profitability reflects the strong performance of the group’s export-oriented businesses and ongoing focus on driving cost efficiencies,” the company said in a statement, adding that the group’s purification and hand protection sectors have a strong pipeline of orders.
The two big issues are apparel and tourism, which are yet to recover. In the case of apparel, no orders are forthcoming for September and October, while winter orders are also uncertain.
Sri Lanka’s biggest problem is the impact COVID-19 has had on the tourism and leisure sector. Unlike other sectors, tourism has been shut off completely with the closure of the Bandaranaike International Airport and the Mattala International Airport to tourist arrivals. Only repatriation flights and some other emergency flights are operating through these airports, while the worrying news is that there is no date set for the reopening of the country’s borders to tourism.
In the absence of tourist arrivals, tourism authorities are working on preparing for health and safety certification by an auditor with 160 hotels seeking this certification. With the number of COVID-19 patients rising in India (Sri Lanka’s biggest tourism source market), the UK and other parts of Europe, health authorities are justifiably exercising extreme caution in giving the go-ahead to open the doors to tourism.
With no signs of the airport being opened in October or November, tourism industry officials say that there is no 2020 winter season for Sri Lanka and that the industry needs to prepare for the 2021 winter season, more than 12 months from now. Tourist arrivals generally peak during the European winter (November to March) period.
With the reduction to one repatriation flight a day and that too on a limited basis, since the quarantine centres are filling up fast and many returnees from West Asia are testing positive for COVID-19, the slow process of repatriating the 50,000-odd workers still seeking to return must cause a lot of anxiety and concern to those waiting to board a flight back to their homeland.
“Mage yaluwo godak thaama balagena innawa pita ratin apahu enna (There are still many friends from West Asia who want to come back),” said Kussi Amma Sera, bringing in a second mug of tea and breaking my trend of thought. “Aanduwa uparima karanawa (The government is doing its best),” I said in response. With exports picking up and savings on import costs due to curbs on imports, Sri Lanka may end up with an improved trade deficit in 2020.