Research by Umesh Moramudali Edited by Aisha Nazim Translated by Nishadi Gunatilake & Kesavan Selvarajah
Why are the prices of some essentials decreasing?
Earlier this month, several media outlets reported that prices of essential goods had reduced. According to the news reports, the price of dhal, sugar, potato, big onions, and other essential items were reduced early August.
- Because the exchange rate stabilised and
- Because the Central Bank provided foreign currency for traders to import essentials; meaning, businesses received USD to continue imports and meet demands.
Nalin Fernando, Minister of Commerce, claimed that the shortage of essential items is addressed as a result of allowing selected imports through open accounts. However, Dr. Nandalal Weerasinghe, Central Bank Governor, stressed that price reductions are due to the stabilization of exchange rate and imposing restrictions on open account imports through the undiyal method. He further stressed that CBSL will take steps to ban open account imports completely, and will take steps to provide the required foreign currency to import essentials.
Data shows that CBSL is pursuing a managed floating exchange rate system which resulted in stabilizing the exchange rate. We can also observe that most of the non-food imports reduced during the last three months. With the import reduction trend, Sri Lanka recorded a merchandise trade surplus in June 2022 for the first time since August 2002. As a result of that import reduction, limited foreign currency can be provided for essential food imports.
Additionally, the reduction on global gas prices resulted in the prices of LP gas also reducing. The price of a 12.5kg gas cylinder has been reduced by 1,050 rupees.
What are the new CBSL rules of dollar conversion?
The Central Bank of Sri Lanka (CBSL) announced that mandatory conversion requirements on service export earnings were relaxed from 12 August. According to the gazette notification 2292/50, service export proceeds received to foreign currency accounts don’t need to be converted to LKR. However, as per the gazette notification 2270/66 issued on 11 March 2022, it is mandatory that service export proceeds to the country within 180 days from the date of provision of services.
Mandatory conversion requirement remains unchanged for goods exporters who should convert residual of the export proceeds received in Sri Lanka, into LKR on or before the seventh (7th) day of the following month. Exporters are however allowed to utilize their foreign currency receipts for repaying foreign loans obtained by them, foreign currency payments related to the particular export of goods, withdrawing foreign currency for export-related travels, and other authorized payments specified in section 4 of the gazette. The remaining foreign currency amounts after utilizing for such authorized payments will be converted to LKR by the first week of the following month.
Although service exporters are allowed to keep their earnings in foreign currency accounts without converting them into LKR, withdrawing such money in relevant foreign currency will remain difficult given the foreign currency shortage in the country.
These mandatory conversions have been in place for many months now. Our previous analysis clearly laid out how the forced conversion rule affects the importers, exporters, and international institutions.
Dead bodies washing up on beaches – what’s the deal?
There has been a lack of communication from the authorities regarding the phenomenon of bodies washing ashore on beaches along the Western Province coastline. Whilst many of your questions stem from the discovery of bodies at Galle Face beach as GotaGoGama wound down, the first instance was reported back in January. On January 10, the bodies of two unidentified men, believed to be aged between 40 and 55 years old, washed ashore in Wellawatta and Bambalapitiya respectively.
In total, at least 11 bodies have washed ashore along the western coast of the country this year. One was a child who was found on the Waikkal beach in Puttalam on June 18. Police have confirmed that the body is of the child who was thrown into the Kelani River by a woman near the Kadirana Bridge in Wattala on June 15 in an attempted murder-suicide.
All the others have been adult men. One of them, who was found with stab wounds on the Wellawatta beach on February 05, was identified as Afham Naseer, a 21 year old student from the Maldives.
Over the last two months, police have recovered several dead bodies on beaches from different parts of the country. One dead body was found on Wellawatta beach on 26 July and police stated that there were no visible wounds on the body. Meanwhile, another body was recovered on 5 August from Dikowita beach in Wattala. The police say the unidentified male was aged between 30-40 years, and the body had been decapitated and dismembered.
The body which washed ashore at Galle Face on July 29, has been identified as that of a 19 year old man from Kottawa. About 72 hours later, the body of another unidentified male, believed to be about 40 years old, also washed up at Galle Face.
Police are yet to disclose motives or announce arrests in these cases. While speculation is rife regarding the cause of these deaths - ranging from underworld gang wars to state sponsored killings - we are currently unable to provide any factual answers on what transpired.
And so the many enterprising freelancers, influencers and consultants with overseas clients descended on Twitter like the Wu-Tang Clan looking for their " .
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