Getting tough
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As the choon-paan karaya came down the lane with loud music alerting all the residents on this Thursday morning, the trio gathered at the gate to ‘welcome him’. I used the words ‘welcome him’ in jest, since their ‘welcome’ to Aldoris was mostly annoying him!“Ah Aldoris, mona bakery kemada ada ganan wedi wela thiyenne (Ah Aldoris, what bakery prices have gone up today),” asked Serapina.
“Aney Miss, ewala mila giya sumane wage-mai (Aney
Miss, the prices are the same as last week),” he replied. The trio didn’t appear to be in a mood to ‘harass’ him today for
they quickly bought some fish buns and moved towards the margosa tree.
“Mae sumane, subha aranchi thiyenawa wage, videsha ratawala weda karana kattiyata (There seems to be some good news for migrant workers this week),” said Mabel Rasthiyadu.
“Eh mokakda (What’s that?)” asked Kussi Amma Sera.
“Pita rata weda karana kattiyata rupiyal dahaya begin (issara dunne rupiyal dekai) denawalu, lankawata evana hema dollarayatama. Eh denne banku maargayen nila maarga walin evana salli walata witharai [Migrant workers will get Rs. 10 (earlier it was Rs. 2) for every dollar that they repatriate to Sri Lanka. This is only for remittances that come through official banking channels],” noted Mabel Rasthiyadu.
“Ow, mama koheda kiyewwa nila novena maarga walin evana salli walata, me prathilabaya denne ne kiyala (Yes, I read somewhere that those who send back money through unofficial channels would not receive this benefit),” added Serapina.
This announcement from the Central Bank came on Wednesday but along with it was a directive by Central Bank Governor Ajith Nivard Cabraal that any money coming into a local bank account through unofficial channels (like ‘Hawala’ or ‘Undiyal’) would be frozen with immediate effect.
Some (maybe many) migrant workers send their earnings through these sources – where you pay a set amount of money to a ‘contact’ in their country of work and in Sri Lanka, another ‘contact’ gives an equal amount to your family) – largely because they get a higher rate of exchange. For instance, a migrant worker using this source of remittance could get up to Rs. 220-230 per dollar compared to Rs. 203 or less when sending it to a bank in Sri Lanka.
Unofficial channels for remittances have been used for many years, more so in recent times because the exchange rate conversion is more attractive and maybe to avoid taxes and unnecessary procedure, though foreign currency accounts are tax free. However, this time the attraction is more since the gap between the official dollar rate and the unofficial rate is as high as Rs. 30 or Rs. 40 to the dollar!
As I pondered over these issues, the phone rang. It was Ruwanputha, the young economist, on the line.
“How are you?” I asked. “Fine… fine,” he said, adding: “I was intrigued by some comments made by former Central Bank Governor Prof. W.D. Lakshman during a budget discussion on zoom.”
“What was it?” I asked.
“Well, he described the 2022 budget as a ‘run-of-the-mill one’, with no plans for the next five years and went on to say that except for the 1971 and 1978 budgets, all other budgets look alike and that proposals in the budget were vague in respect of poverty alleviation and growth in the country,” he said, pointing out: “Would he have made the same comments if he continued as the Central Bank Governor?”
“No, he wouldn’t. This is a common problem where officials while in government are silent and fail or fear to point out flaws in decision-making. But the moment they are out, they speak out!” I said, adding that a recent circular was issued banning public officials from criticising the government on social media, which further gags public officials from, in some cases, highlighting flaws in governance in areas that come under their control.
The problem with the public service is that high officials – secretaries to ministries and chairpersons of state agencies/public corporations – are chosen by politicians and not independently picked by the Public Service Commission (PSC) which is vested with the powers of appointment, promotion, transfer and disciplinary control of most public officers. So, their mandate is often to do the bidding of their political masters even if an irregular order is given.
There was a time when the PSC reigned supreme and secretaries to ministries were the crème-de-la-creme of the public service and comprised distinguished civil servants in the late-1970s and early-1980s like D.B.I.P.S. Siriwardena, Bradman Weerakoon, W.T. Jayasinghe or Lionel Fernando – to name a few – who would call a spade a spade and stand by their decisions however unpalatable it would be to ministers.
After this interesting discussion, I ended the conversation with Ruwanputha and began concentrating on today’s subject; remittances from migrant workers.
The Central Bank’s decision to grant Rs. 10 per every US dollar remitted through official channels – applicable only for the month of December 2021 – stems from a gradual erosion of foreign reserves. According to Opposition parliamentarian Eran Wickramaratne, foreign reserves have fallen to US$1.5 billion presently, the lowest in history, and include gold reserves of $300 million. He alleged that the acute shortage of foreign exchange would result in a shortage of essential food items and fuel.
Examining the Central Bank Governor’s directive to freeze bank accounts with irregular remittances, it raises the question as to how this would be implemented. For example, anyone using the irregular channels of remitting money would send money straight to a family in Sri Lanka. It doesn’t go into a bank account. So how will the banking regulator track the source of funds? Even with an added benefit of Rs. 10 per dollar which makes it Rs. 213 per dollar a migrant worker would get for sending money through official channels, it is still short of the Rs. 230 or Rs. 240 they would get in the grey market.
Don’t get me wrong. I am not for a moment promoting unofficial banking schemes but pointing out the reality where migrant workers will always look for the best rate of exchange. In the interests of everyone, the dollar should be fixed at the real rate of exchange – maybe around Rs. 215 – to see whether this would increase migrant remittances.
With the Central Bank desperately needing to boost its fast-depleting foreign reserves – one of the reasons why Finance Minister Basil Rajapaksa broke tradition while the 2022 budget debate is on to urgently visit India and speed up the promised $500 million loan – it remains to be seen whether the one-month window of a monetary incentive to remit money through banking channels would work or not.
The Central Bank Governor is convinced that Sri Lanka has not hit rock bottom and says by the end of the year, the reserves would be boosted to over $3 billion – $1.5 billion more than what we have today.
Let’s wait and see, I thought as Kussi Amma Sera walked in with my second mug of tea, saying: “Pita-rata wala weda karana ape aya genada liyanne (Writing about migrant workers).” I nodded in acknowledgement.
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