The Sri Lankan diaspora could be the lynchpin in increasing foreign reserves in the country at this crucial moment. This country’s tale of woe is a dollar crisis. The diaspora is estimated to be around three million Sri Lankans. If everyone deposits US$ 500 in a friend’s or relative’s account in Sri Lanka, the country would be able to realize a massive amount of money — more than US$ 1 billion — at this critical juncture.
Not everyone may be able to afford the US$ 500, but even if some contribute a lesser amount such as US$ 50 or so, it all counts. The idea is nothing to scoff at. In Bangladesh a forex crisis was averted for the simple reason that Bangladeshis the world over deposited more money than they usually do, when the pandemic happened. Now it has reserves exceeding US$ 45 billion.
Was that patriotism? Probably not. But it was a cultural thing. The Bangladeshis were genuinely worried about those left at home when the pandemic ravaged the economy. Of course we had a policy issue here in Sri Lanka that kept the US dollar pegged at a predetermined rate, and that is an old story now.
Now that this policy has been reversed, there is also a corresponding tightening of interest rates so that the value of our currency appreciates a bit. When the interest rates are higher, the exchange value of a currency goes up because more dollar depositors deposit their money to take advantage of the high interest rates.
After a very long time, there is a substantial seven point or so raise in exchange rates after the appointment of the new Central Bank Governor Dr. Nandalal Weerasinghe.
This is a huge welcome change in policy. It means our currency is bound to appreciate in value somewhat, and then the premium status of the dollar will hopefully no longer apply, and hence the dollar black market will hopefully lose its current momentum.
It means that remittances will hopefully increase through regulation channels, bringing in the requisite foreign exchange. It is a policy requirement that should have immediately followed the unpegging of the dollar, but it did not happen.
BAILOUT
Now that it has happened finally, there is reason to believe that finally dollar remittances would take place through the movement of natural market processes — not through coercion. But, there is a massive dollar deficit at the moment considering the loan payments that are due, and there are more essential commodities such as fuel that have to be purchased. Until an IMF facility hopefully materializes, there would be a bridging requirement.
This could be met by diaspora contributions. There may be schisms in the diaspora over various issues in the home country, but everyone domiciled in various parts of the world other than Sri Lanka would know the gravity of the situation. Ideological or other differences apart, it is expected that they would recognize this simple fact and come to the rescue of Sri Lanka.
Why didn’t the Sri Lankan situation not mimic that of Bangladesh during the pandemic i.e. why were there no comparable dollar deposits from various folk who are part of the Sri Lankan diaspora abroad?
It is thought that those folk who did make deposits did so using the ‘Undial’ or other methods because the banks gave an unrealistic return for the dollar in contrast to unorthodox channels that were making brisk business because of the dollar peg that was in operation. The peg has been removed now, so there should not be any impediment to making deposits following the dollar being freed to float.
There have been some Sri Lankans that have rallied opposite Sri Lankan embassies abroad calling for regime change in the country but even if any member of the diaspora believed that there should be such a transformation, that should not preclude him or her from being part of a dollar bailout.
ORDINARY LANKANS
Such a ‘bailout’ would simply put the ordinary Sri Lankan out of misery because there is a dire need for dollars — at least until an IMF bailout — and any bridging assistance would be welcome. It is after all the strength of numbers that comes into play. No single person is asked to contribute a disproportionate amount unless they voluntarily do so.
All they are asked to do is to contribute a small sum that each person abroad could afford. All of these deposits could help the country — and the rupee equivalent would also go some distance to help those in Sri Lanka that have suffered job losses etc. and are hit by high inflation and the other ill effects of the current ongoing economic meltdown.
The Bangladeshis put their shoulders to the wheel when the pandemic was at full strength. Here is an excerpt from an Al Jazeera story concerning Bangladesh:
“Members of the Bangladeshi diaspora from the United States have mobilised funds to support poor families back home who have been financially hit hard by the ongoing COVID-19 pandemic”.
No doubt that diaspora communities were also badly hit due to the pandemic, in big cities such as London for instance, that experienced COVID related lockdowns. People of foreign origin were said to have been disproportionately affected by the pandemic related closures in many European cities.
However, the recovery has also been relatively fast in most parts of Europe, with Denmark for instance having lifted all COVID related restrictions completely. Most other countries including the UK have more or less followed suit.
Since there have been no financial meltdowns in the European countries as Sri Lanka is experiencing now, the recovery has stabilized the lives of most in the Sri Lankan diaspora. As such these communities are in a far better position to be able to contribute to the ‘old country’ when Sri Lanka is going through an unprecedented meltdown as a result of the events of the last few months, and the period in which the pandemic was raging in our part of the world.
DIASPORA ASSOCIATIONS
Most diaspora communities are connected to Sri Lanka organically through the various associations they have formed etc. and through other conduits such as various groups that have been formed to foster religious amity etc. Helping the old country should therefore not be an ask that comes from the blue — these communities still have an immense interest in what goes on in Sri Lanka, and that has been quite apparent from the amount of interest they have evinced in the past in the country’s affairs.
Some among the diaspora would have no doubt done their bit already and made some sort of contribution but a more focused effort is now called for because Sri Lanka is now facing the most crucial hour, obviously, which fact would have been made even more obvious from reports about the queues for diesel and the power cuts that the country experienced. Even though things may have improved marginally with regard to the power cuts etc. it is clear that Sri Lanka is still not out of the woods by any yardstick. Loan payments are coming up in June, and amid frantic efforts to restructure these payments, there is an acute need for an infusion of dollars so that the country may be bailed out before the IMF bailout in particular materializes.
Even if the IMF process goes through without a glitch there would still be a dire need to stabilize our reserves because of the magnitude of the crisis that hit us. These facts should be obvious to the members of the Sri Lankan diaspora out there. They could help, and make a tangible change which would make a historical impact on the fortunes of the country when it is in the midst of an unprecedented crisis — perhaps the most profoundly debilitating one since the grant of Independence in 1948.
– Daily News Sri Lanka
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