Prez should explain why he scrapped time-tested exchange controls – NFF

By Shamindra Ferdinando

President Ranil Wickremesinghe, who is also the Finance Minister, should take immediate steps to restore the provisions of Exchange Control Act (ECA) of 1953 as part of the overall efforts to stabilise the national economy, NFF MP Jayantha Samaraweera told The Island yesterday (09).

The former State Minister said that furthermore UNP leader Wickremesinghe owed an explanation as to why his government introduced the current Foreign Exchange Act in 2017. The Kalutara District lawmaker said that President Wickremesinghe couldn’t remain silent as it was his government that disposed of the Exchange

Control Act of 1953, thereby paving the way for exporters to park export proceeds running into billions of dollars abroad.Responding to queries, MP Samaraweera said that he had raised the accountability on the part of President Wickremesinghe in parliament on March 08.

Acknowledging that though the economic situation had slightly improved over the past several weeks, MP Samaraweera said that Wickremesinghe-Rajapaksa government should take remedial measures to plug the loopholes or face the consequences. “The current Exchange Act introduced during Ravi Karunanayake’s tenure as the Finance Minister is perhaps one of the major reasons for the continuing crisis,” the former JVPer said.

The issue at hand was whether somebody in the yahapalana government benefited by repealing the time-tested exchange control laws, MP Samaraweera asked, underscoring the need to examine this matter carefully. “The possibility of a conspiracy cannot be ruled out. All of us know how the UNP perpetrated Treasury bond scams, twice, in Feb 2015 and March 2016. The new Exchange Control Act was enacted in the wake of Treasury bond scams,” MP Samaraweera pointed out.

Referring to a statement made by Trade Minister Nalin Fernando in Parliament on Wednesday, MP Samaraweera said that the government had lost the wherewithal to meet its basic obligations as it didn’t have foreign exchange.

Now, the UNP leader who created an environment for exporters not only to stash away export proceeds overseas and oversaw the Treasury bond scams, held the finance portfolio, MP Samaraweera said. Wickremesinghe should set a deadline for restoring the old Foreign Exchange Act, the MP said, recalling how the UNP leader publicly acknowledged the need to amend the 2017 Act.

MP Samaraweera told parliament on Wednesday President Wickremesinghe couldn’t afford to turn a blind eye to the declaration made by Justice Minister Dr. Wijeyadasa Rajapakse, PC, early last December on the basis of disclosure made by the US-based Global Financial Integrity watchdog that as much as USD 58 bn were parked overseas.

The MP pointed out that in addition to Minister Rajapakse, Opposition lawmakers Vasudeva Nanayakkara, Wimal Weerawansa and Gevindu Cumaratunga, in Parliament, estimated the stashed amount at over USD 35 bn, MP Jayaweera said. The trio has alleged that the Exchange Control Act No 12 of 2017, enacted during the yahapalana administration, allowed exporters to keep funds overseas.

MP Jayaweera said that President Wickremesinghe should inform the parliament without further delay how he intended to address the issue. “We obtained about USD 4 bn in 2022 from India. On top of that Sri Lanka owes the world as much as USD 53 bn. No one should forget that the situation stabilised to an extent as a result of Sri Lanka halting debt servicing,” MP Samaweera said.

Asked why President Gotabaya Rajapaksa’s government didn’t amend the yahapalana Exchange Control Act, MP Samaraweera said that NFF leader Wimal Weerawansa had taken up the issue with the Cabinet-of-Ministers. However, Basil Rajapaksa, who succeeded Mahinda Rajapaksa as the Finance Minister in June 2021 had dismissed the NFF’s recommendation, MP Samaraweera said, adding that Basil had declared that restrictions would discourage exporters. In fact, General Secretary of the Democratic Left Front (DLF) Vasudeva Nanayakkara proposed the introduction of a ‘QR’ system in 2021 in view of the foreign exchange crisis, MP Jayaweera said. That proposal, too, was rejected by Basil Rajapaksa, he said.

The MP stressed the need to tackle quite a formidable challenge posed by well-organised influential public–private sector partnership engaged in ‘over invoicing’ and ‘under invoicing’, with the blessing of successive governments. That too contributed to the forex crisis, the MP said.