Open letter to the Governor of the CBSL:
by Eng Parakrama Jayasinghe
Those who have seen the papers today can breathe a cautious sigh of relief, based on the assurances of Central Bank Governor Dr Nandalal Weerasinghe. The Governor is optimistic that inflation in Sri Lanka may not reach 70% as feared. In addition, the opinion was expressed that the severe shortage of foreign currency has also eased, to be able to import our essentials, such as food, medicine and fuel.
In this context, while grateful for the ray of hope for the future of Sri Lanka, I hope that this message will not be taken as a signal to return to our wasteful and debauched practices of the past, which have reduced Sri Lanka to beggar status. As such, it is important that Dr. Weerasinghe and the Central Bank remain cautious and vigilant and do not release any foreign exchange expenditure for the import of anything that cannot be recognized, strictly, as essential and for which it does not there is no indigenous alternative ready. He is also wisely considering limiting recently introduced open-account imports, which he says is not the reason for recent positive signs of improving food supplies and some reduction in prices.
It is the sad reality that there is no short term option but to remain nearly 100% dependent on fossil fuels for our transportation needs. The nation’s gratitude is due to the Hon. Kanchana Wijesekera, Minister of Power and Energy, for the near miracle he has achieved in getting rid of long fuel queues, nationwide, with the introduction of the QR system. There may be improvements and changes needed to address sectors, such as the supply of fuels for agricultural machinery, the fishing sector and construction equipment, which are strictly unrelated to transport, but which are equally important to the economy, to a large extent. I’m sure he would address those necessary improvements, if they are not already in place. He also took the important step of keeping the refinery running, at full capacity, which is a most important decision to further reduce expenses from the inevitable drain of foreign spending.
It is heartening to read that monthly consumption has already been cut in half from the projected $500 million to $235 million per month. Those using the limited quantities of fuel issued will now be forced to be frugal in their consumption, which is now imposed on Sri Lankans, who have been pushed to live well beyond their means by successive governments.
However, I would like to draw the Governor’s attention to the fact that the uncontrolled import of LPG, which costs $350 million in 2020 according to CBSL data and is now expected to exceed $400 million, if allowed freedom , does not in any way fall into the category of essential imports for cooking purposes only. This is because, unlike the case of transportation fuels, we have acceptable indigenous alternatives. I have already tried to convey this message to the authorities and people of Sri Lanka, who seem to have fallen on deaf ears, given the recent action of using borrowed dollars to import large quantities of LPG.
Obviously, the government would have considered this necessary for reasons of political expediency, instead of recognizing the emerging trends of innovative Sri Lankans, by introducing very acceptable alternatives, both for the domestic sector and for the service sector. restoration.
But this reckless and short-sighted action all but destroyed the fledgling industry of making wood- and charcoal-based cookstoves, which were readily accepted by consumers. The authorities did not recognize this trend, as evidenced by the fact that while there were queues of empty LPG cylinders at all outlets, people decided to go home and leave. to adopt alternatives when absolutely no LPG had been available for almost two months.
The current practice of trying to revert to using LPG, using borrowed dollars for consumption, for which we have a viable alternative, and the daily news that Sri Lanka is in default on all loans past, and is considered unsustainable, is nothing less than misleading the public. The consumer himself, if not the authorities, should recognize the following to which he contributes with each purchase of the LPG cylinder…
* The import of LPG is possible, only thanks to loans that will have to be paid by our children and grandchildren
* Continued reliance on LPG is a never-ending problem and will require more and more loans, with no chance that using LPG will result in foreign exchange earnings
* Loans taken must be repaid by the whole country, while the benefit only benefits a limited part of society, which is morally unacceptable
* For those lucky enough to obtain even a cylinder of LPG, adopting the already available stove options, using either charcoal or wood for cooking main meals, would significantly reduce monthly expenses (as indicated). This would preserve the LPG bottle, purchased with difficulty, from being available for any limited use, in the meantime, and for any emergency, for many months.
Therefore, it is not a sacrifice on the part of consumers, as they have everything to gain by reducing the annual cost of cooking energy by at least half, to accept perhaps a minor inconvenience. (See graph). Consumers can drive the change that would reduce demand for LPG and save the country millions of dollars year after year.
This would create a significant indigenous industry through which the millions of dollars sent would go to local industrialists and rural communities, providing charcoal and timber. Even a 50% reduction in imports could result in a local industry worth over Rs 80 billion a year.
Our appeal to you, as Governor of the Central Bank, who has undertaken the Herculean task of saving the economy, and the pride of the Sri Lankan nation, is to demand at least a 50% reduction in leakage dollars for this non-essential import that had been forced upon unsuspecting consumers by aggressive and fraudulent promotions for commercial interests alone. The potential for a very dynamic industry with the majority of the profits flowing to the rural economy of over Rs 80 billion a year can no longer be ignored.