Billions of dollars in foreign income stashed overseas
Sri Lanka is losing billions of dollars of much needed foreign exchange as a result of hoarding in earnings overseas by exporters without repatriating it, going against the directive of the Central Bank (CB).
According to a report compiled by an official think-tank tracing illicit financial flows, corruption and illicit trade, Sri Lanka has lost a staggering $53.5 billion during the past 12 years following this practice of parking money overseas.
The CB says that exporters are estimated to have hoarded nearly a staggering $3 billion in earnings overseas without repatriating last year.
The country has received US$ 1450 million of export earning in October 2022 and, of it $1199 million dollars were hard goods and of this only $326 million dollars was converted.
It was less than 23 per cent, CB Deputy Governor Yvette Fernando recently disclosed at a media conference adding that services sector earnings was $251 million.
As per the available official data, if all the export earnings are repatriated and converted, the average monthly export foreign exchange flow would have been $985 million.
The Revenue Monitoring Unit of the CB is continuously monitoring the export conversion and the dollar earnings using a tracking mechanism since July.
It has been revealed that the CB recently sent a questionnaire to exporters requesting information of their export performances, forex earnings and expenses etc since without data no assumptions can be made on this issue.
But only 57 per cent of them responded making it difficult to collect data and arrive at a conclusion.
Some of these traders either over-price or underprice the declared value of imports or exports, and transfer money overseas by hiding it within the regular payments for commerce in the international trading system, a high ranking official of
Sri Lanka Customs told the Business Times.
The CB issued regulations by gazette notification to oversee the export earning repatriation in February 2021. Until then export proceeds repatriation had not been monitored at all.
All licensed banks are required to submit reports relating to the repatriation of export proceeds to the Director of the Foreign Exchange Department of the Central Bank.
However the total merchandise export value of Sri Lanka is still calculated based on the statistical value submitted to the Customs via Export CusDecs, an official said.
He emphasised the need of implementing the shipment-wise export remittance monitoring system already developed by the ICT Division of Customs through the Customs ASYCUDA system.
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