The following is the text of an interview with former Foreign Minister Rohitha Bogollagama conducted and transcribed by Subadra Deshapriya
“Following Sri Lanka’s collapse in April 2022, public trust dwindled and no faith could be placed in receiving remittances from Sri Lankan workers abroad due to the precarious situation.
However, the situation began to change after President Ranil Wickremesinghe took the helm. Public trust has returned and migrant workers appear to believe Sri Lanka is now on its way to stability. The changes have been communicated and the response of foreign investors and migrant workers has become favourable. Trust in the banking system has returned and they have been encouraged to remit more funds.
Foreign currency
The main reason that led to the depreciation of the Sri Lanka Rupee (LKR) was the high value placed on foreign exchange. While the Rupee dropped, the value of the US Dollar and even the Indian Rupee (INR) increased by fourfold at times. Those in possession of foreign currency benefited. Today many are keen to invest in Sri Lanka, especially in the field of tourism. But only foreign investors are given this opportunity. But foreign workers have an advantage now due to the increased value of the dollar against the rupee.
In total, foreign direct investments in 2006 were US$ 640 billion. After 16 years, our investment strength has not improved due to the confusion relating to policies. We have to go for investment-worthy goals. We have not implemented a program to attract investors.
Following the appointment of Ranil Wickremesinghe as President in 2023 his contribution to creating a strong program to attract investments will be highly beneficial. After the President launches a new policy framework, a new investment program will be implemented in Sri Lanka this year allowing for the proper assessment of these investments in the future. We must not only attract investments but also work to retain them. We have seen such issues in the recent past where some garment manufacturers have left Sri Lanka to set up abroad. We must now allow for negative sentiments about investing in Sri Lanka to take hold. We must be able to identify the infrastructure to overcome these challenges.
Investment opportunities
We must find new ways to earn foreign exchange and go after modern investments such as modern technology. We must work closely with India and obtain investment opportunities. We must identify key economic hubs such as Tamil Nadu, Andra Pradesh and Karnataka to take our investments to the world.
We must improve the Board of Investment (BoI) which can lead to investor confidence. We must look at new ways to connect globally and improve relations with Japan, South Korea, China and India.
Traditional export of garments cannot resolve the forest crisis. Foreign remittances are on an upward trend in comparison with December last year. We must be able to achieve 80 percent of our forex target in 2023.
Remittances through informal or illegal means was a serious issue for a country of our scale. Therefore, those remitting funds through such means must be provided attractive incentives to use formal means. Regulations cannot curtail this issue.
It is important for exporters also to be transparent for us to earn more forex. The Central Bank is therefore now looking to implement an export accounting system to ensure this. If we can implement a plan to provide incentives to those with such high transparency we can attract more foreign exchange.
We must also instill confidence in investors and exporters that they will be able to obtain when necessary to fulfill their needs. They will not attempt to keep their money abroad.
The LKR was allowed to float in the recent past. This is not something that should be done often and should be done with certain limitations. If not we will face a significant crisis due to the weakened Rupee.
The depreciation of the Rupee will affect imports that provide us with coal, fuel and fertiliser. In such a situation allowing the rupee to float would be disastrous. The Rupee must be protected. It must be maintained at a certain level.
Debt restructuring
The President is confident of receiving International Monetary Fund (IMF) support in March. If we commence one on one discussions with China on debt restructuring we can receive more support and aid.
This is up to the President to initiate. If we can postpone debt servicing we will be able to balance our income and expenditure, if not our earnings will not be sufficient to repay our loans. We will not be able to spend on essential services and important if not. If this situation is not managed we will head towards a disaster.
The President emphasises that we should adjust our spending heads on the basis of priority while minimising our expenditure.
IMF support will signify that we do have a plan to rebuild the country. It will instill a sense of confidence about us in other parties as well. Therefore we must obtain IMF support.
But it is not the only way to receive help. We must foster bilateral relations for this purpose. We have a great many assets and natural resources. We should not be suffering. But we need creativity and leadership to make use of these.
We must use various tactics to increase foreign exchange. While the Central Bank of Sri Lanka (CBSL) has imposed limitations, they must be increased within the next nine months. The Government must not waste its earnings on loss-making ventures. We will have to rethink if we should continue with such Government enterprises as it may lead to the people being taxed in the end.
Good management
President Ranil Wickremesinghe is attempting to take the country down a path of good management. We must stand with the camp that seeks to take this country forward.
The country is in a state of reset. Therefore, we need the support of other countries. In my opinion, India, China and Europe are important in this situation. They will strengthen us and support the future existence of our country. We will need to revisit our policies and curtail expenditures while also addressing unemployment. We now see the consequences of the mismanagement of a country and its governance.
We must seek to attract international businesses and President Ranil Wickremesinghe has this ability. The key international investors in the world must be approached through the President. They will only then place their confidence in us and come to Sri Lanka. Investor conferences and trade fairs are of use in the current context as an investment depends on the trust they can place in a country’s leadership. There are no quick fixes for the economy but we must increase our opportunities to move this country forward and rebuild it.”