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Saturday May 25th, 2024

Why is Sri Lanka’s rupee appreciating?

VIRTUOUS CYCLE: The central bank is controlling its rupee credit, allowing its ‘deposits’ in the form of dollars to grow. When reserves are collected, a central bank will operate policy tighter than a currency board.

ECONOMYNEXT – Sri Lanka’s rupee has so far appreciated from around 360 to the US dollar to below 300 to the US dollar in 2023 amid complementary money and exchange policies of the central bank which is creating a virtuous policy cycle.

Currencies of reserve collecting central banks collapse when money and exchange policies conflict and more money than needed is supplied through open market operations, especially after using reserves for imports (sterilizing outflows).

Initial weakness of the soft-peg or a flexible exchange rate, then triggers a loss of confidence and panic, which then snowballs into outflows (flight) and delays in inflows, which requires extra high interest rates to slow domestic credit to match the outflows and reduce domestic investment and consumption.

If policy rates are kept fixed with new injections (reserve sales are sterilized) a vicious cycle of reserves sales and injections take place (contradictory money and exchange policy) until all reserves are lost and a float and a rate hike is forced upon the monetary authority.

Why is the Sri Lanka rupee appreciating now?

The short answer is that the rupee is appreciating, because under Governor Nandalal Weerasinghe, the central bank is not really printing money, credit has been contained with more market determined interest rates, and the currency has been allowed to appreciate by not buying up all the unspent inflows in a given day.

A currency will be under upward pressure if open market or liquidity operations are deflationary (liquidity from dollar purchases is withdrawn from the interbank market) and downward pressure if liquidity operations are inflationary (liquidity is injected through dollar or other asset purchases by the central bank) and the money is used by the domestic credit system and turned into loans.

At the moment domestic credit is weak and some banks, instead of giving loans, have deposited money in the central bank creating what is called a liquidity trap, also known as a private sector sterilization.

The government had also raised taxes and cut spending to reduce the growth of domestic credit. Energy ministry has market priced fuel and electricity. But as seen in 2018, if the central bank continues to print money, the rupee will fall despite hiking taxes and market pricing fuel.

Mostly interest is now being borrowed by the government, which is being rolled over as paper, including within the central bank, which is leading to an expansion of domestic assets of the central bank without any liquidity being released to other banks.

Is the rupee market determined?

No. No good money or stable currency or bad money for that matter, is market determined. That is a common claim made by Mercantilists particularly after the break-up of the Bretton Woods in 1971-73. The mistaken ideas about money originally started to mainstream in the 1920s, which were ideas that were defeated in the earlier century and prevented balance of payments deficits and chronic inflation.

A state owned central bank has unlimited powers through open market operations to expand the supply of money, which is usually called ‘monetary policy’. The question of ‘supply’ is therefore a matter of bureaucratic decision. The ability of the central bank officials or economists to create extra money has to be constrained by an anchor, which limits the ability to conduct ‘monetary policy’.

Politicians or legislators have the lawmaking power to control mainstream ‘economists’ through strict laws imposed on the monopoly power given to a central bank of a country to overproduce money, usually through an inflation or exchange rate target.  The value of any currency is therefore determined by monetary policy which is constrained by an anchor, not the market.

Before 1971 the anchor was an exchange rate, gold or silver. Gold was a market selected anchor chosen by the people – users of money – in preference to other anchors. Under such a rule, central banks a have an automatic limit to their money printing powers or monetary policy.

How do floating exchange rates work?

Floating exchange rates have targeted either money supply or an inflation index. Inflation targeting has partially failed in the US and EU areas by ‘economists’ trying to create jobs or increase output through liquidity injections.  They are now now suffering high inflation due to bad monetary policy and delaying tightening by blaming real economy phenomena like supply chain shocks for inflation. The lower the inflation target, and more transparent the index, the better the stability.

The price or rate of a floating exchange rate is determined purely by monetary policy (interest rate and liquidity operations) with no forex interventions. Clean floating exchange rates backed by appropriate monetary policy have turned out to be very strong and are generally called ‘hard currencies’. Most so-called hard currencies that emerged after the failure of the Bretton Woods soft-pegs are clean floats. The Swiss National Bank is using more complex monetary policy. So is the Singapore Monetary Authority, which is operating on currency board principles.

In other words, the monetary anchor or rule will determine the value of the currency as well as domestic inflation, which are two sides of the same coin. When interest rates are raised and it works through the credit system (transmission mechanism), a floating currency will also appreciate against other currencies (based on their individual credit cycles) as well as real commodities.

Is the rupee a floating exchange rate?

No, the rupee is not a floating exchange rate because the central bank is collecting foreign reserves. It is a soft-peg or flexible exchange rate, which collapses suddenly when extra money is produced through various liquidity windows when credit demand is strong, and appreciates suddenly when liquidity is withdrawn and/or credit demand falls.

In a soft-pegged or flexible exchange rate, where the central bank collects reserves, exchange rate policy (interventions) will influence the value of the currency as well as monetary policy.

These central banks have two anchors, an inflation target (monetary policy) as well as interventions in the forex market (exchange rate policy).

The exchange rate is targeted in a fully discretionary, non-transparent manner, unconstrained by law. The non-transparent, deliberate, discretionary intervention is labelled ‘market determined’.

If the dollar purchases are less than withdrawals of liquidity permitted by a given interest rate regime and domestic credit (monetary policy) the exchange rate will appreciate.

This discretionary power of a money monopoly is sometimes deployed to depreciate a currency to maintain ‘export competitiveness’ based on Mercantilist ideology. The policy triggers inflation, nominal interest rates higher than in countries with floating rates or hard pegs, undermining fiscal metrics, as well as motivating strikes and social unrest, discouraging foreign investment.

So no, the rupee’s value is not market determined. Its value is determined by two anchors. If the two anchors conflict the rupee will fall, if they do not, the rupee will be stable or strengthen.

Are money and exchange rate policies in conflict now?

In recent months, liquidity generated from dollar purchases have disappeared into an overnight liquidity shortage, which has reduced from levels seen at the beginning of the year without being used in the economy. On the other side of the balance sheet of the central bank, the dollars have been loaned to foreign countries as foreign reserves. On December 31, money borrowed (printed) overnight from the central bank was about 561 billion rupees. The volume had fallen to about 120 billion rupees on June 01.

Separately banks have also deposited money in the central bank or kept in their RTGS accounts. The central bank has also bought some Treasury bills outright in partially offsetting amounts.

Conflicting money and exchange policies can be seen as rising domestic assets of a central bank (T-bills holdings) in the red line and falling net foreign assets. As a share of reserve money or the monetary base, net foreign assets decline.

That is what happens in a ‘balance of payments deficit or a currency crisis as seen in the graph. At the moment Treasury bill volumes have not fallen exactly line with foreign assets partly due to interest rollovers.

If interventions are made to build reserves and liquidity is not withdrawn through open market operations, amid weak credit, liquidity will build up until interest rates fall and credit resumes again. Interest rates will fall towards the lower policy corridor. Exchange policy will therefore determine monetary policy in that situation, which comes when an IMF reserve target is met amid weak credit.

Another way of describing a single anchor floating exchange rate is that reserve money will grow in step with domestic assets. In a hard peg reserve money will grow in step with foreign assets. In a soft-peg domestic assets will go up when money and exchange policies conflict in a vicious cycle. Complementary policy – as now will lead to a rise in foreign assets compared to reserve money.

In summary soft-pegs or flexible exchange rates collapse because there are two anchors which conflict in a vicious cycle of exchange interventions followed by liquidity injections to stop rates from going up.

Monetary policy in a country that goes to the IMF frequently, is usually partially constrained by a high inflation target, perhaps double or more of hard currencies, leading to higher inflation and instability than counties with better money.

In a hard peg, where the country has no need to go the IMF, there is only an exchange rate policy and no monetary policy, in other words only one anchor. The exchange rate therefore does not fall.

Are tourism receipts pushing up the currency?

Not really. Higher tourism receipts will widen the trade deficit, in a pegged or floating regime.

Tourism receipts bring inflows and can push up the rupee on the day it is converted only. A part of the receipts is immediately spent by the recipients, like tourism sector workers, directly on imports, say on fuel and foods. A part they may save in banks. The hotel companies will pay for electricity and also repay loans.

If credit demand is strong, these money deposited in banks will be loaned for new investments generating imports and widening the trade deficit.  But higher tourism receipts will not create a balance of payment deficit or pressure on the rupee, despite widening the trade deficit.

If the central bank sells a Treasury bill in its portfolio to a bank and takes the deposited cash, or a similar amount of other money, banks will not be able to lend the money to the economy, and there will be a balance of payments surplus and upward pressure on the rupee.

If the central bank buys a Treasury bill and injects money, when credit has recovered, regardless of any tourism receipts, banks will give credit with the new money on top of the tourism receipts. The rupee will be under pressure until interest rates are allowed to go up or reserves are sold to mop up the new money.

So, no. Tourism is not responsible for currency appreciation. The central bank is solely responsible for currency strength. It has the monopoly on creating or destroying money and meeting the real demand for money.

Is the foreign buying of Treasury bills driving up the rupee?

Inflows will only put temporary upward pressure on the day of the conversion if the dollars are sold in the open market. If the central bank buys all the dollars from the foreign investor and creates new money there will be no rupee appreciation. If credit demand is strong, all inflows will eventually be spent by their recipients or loaned by banks and the trade deficit will go up.

If the central bank sells a security and mops up the money from the banking system it created in buying dollars from foreign investors, it will be able to keep the dollars it bought as reserves. If not, the money will be spent by their recipients – the party that sold the Treasury bill to the foreign investor, usually the government.

If the government uses the dollars from Treasury bills to repay foreign loans, the rupee will not appreciate and neither will the trade deficit expand.

Inflows through the financial account will boost imports and widen the trade and current account deficit, but will not create a balance of payments deficit or forex shortage, which is the result of expansionary open market operations or liquidity injections (monetary policy).

Either way it can be seen that monetary policy is the final driver of the exchange rate and foreign reserve changes. That is why large volumes of ‘bridging finance’ last year failed to stabilize the exchange rate or end forex shortages, until rates were raised.

The central bank can also sell a Treasury bill in its portfolio to a foreigner and take the money directly into its reserves without disturbing reserve money or interest rates or domestic credit (a reserve money neutral transaction). IMF loans before budget support loans were done in this manner.

From the foregoing it can be seen that any collecting of reserves and lending to foreign countries involves keeping interest higher than if reserves were not collected.

Are import controls the reason the rupee is appreciating?

Definitely not. Sri Lanka had 3,000 imports under control in 2021 and it eventually led to the biggest reserve losses and imports and eventual default.

At the time the central bank was refusing to roll-over Treasury bills and injecting money and this money was being loaned by banks driving unsustainable credit into permitted areas, for example building material for construction.

Imports of non-essential goods like cars which attract high rates of duty are usually controlled, leading to loss of revenues, more money printing and forex shortages.

Freeing import controls will not lead to a depreciation unless the central bank prints money to keep rates down. If a lot of loans are given to buy cars and the central bank prints money to keep rates down, then the rupee will fall. If not, banks will have to choose between cars and say financing an apartment or some other project, keeping the exchange rate stable.

If banks choose cars which have high tax rates over some other loan, government revenues will go up and interest rates can fall than if  a loan was given to a project involving imports of low taxed capital products.

Are IMF loans pushing up the rupee?

No. IMF loans are almost always lower than reserve targets. In addition, IMF loans in the past came directly into the central bank balance sheet and was loaned to the US without disturbing the domestic credit system.

Also IMF gives loans only after the central bank stops the cycle of sterilization and eliminates downward pressure on the rupee through a rate hike and a float. That IMF money drives up the rupee – or any other currency – is media hype.

IMF loans however can give confidence and end or reverse capital flight.

Can an IMF reserve target drive the rupee down?

Yes. Any IMF reserve target, which is not accompanied by a market interest rate to reduce domestic credit can drive the rupee down. Usually in the first year of an IMF program when monetary policy is tight and private credit is weak or negative it is possible to both collect reserves and keep the exchange rate stable. If the central bank can resist the usual Mercantilist demand for a ‘competitive exchange rate’ the currency can appreciate and the economy can recover faster and people will have no ‘pain’.

But in the second year of an IMF program rates are cut when the economy and private credit recovers. Rates are cut because inflation is low under a domestic anchor. The currency then slides if the rate cuts are enforced with domestic assets purchases as money and exchange policies conflict.

When credit demand recovers, and rates are cut, and attempts are made to buy dollars (increase foreign assets of the central bank) without a corresponding decline in domestic assets of the central bank, which is needed to curtail bank credit, the rupee can fall.

Central bank dollar purchases are different from the Treasury purchasing dollars from the market to repay debt, which is similar to the Ceylon Petroleum Corporation buying dollars with rupees already in the system. Central Bank dollar purchases creates new money and expands reserve money. If the dollars are not re-sold when the rupees are used by the former owners of the dollars, or if the cash is not mopped up before use, the currency will fall.

Again, monetary policy is the final driver.

Central bank reserve building is identical to debt repayment. Except that, central bank reserve building is considered ‘below the line’ in BOP calculations. Debt repayment is ‘above the line’ and is part of the capital/financial flows section of the balance of payments. This is one of the reasons why East Asian countries with fixed or semi-fixed exchange rates maintained with deflationary policy, have current account surpluses.

Can a resumption of debt repayments drive the rupee down?

A resumption of debt repayments will be accompanied by a resumption of debt funded foreign aid projects. There are also budget support loans. Resumption of debt repayment can lead to depreciation if the domestic interest rate is insufficient to balance domestic credit at the given ‘flexible’ exchange rate.

This problem is generally explained by what is known as the impossible trinity of monetary policy objectives. In order to maintain a free capital or financial account (free capital flows or debt repayment) at a stable exchange rate, the central bank has to allow interest rates to change accordingly and the necessary changes allowed to take place through the domestic credit system.

That is why in a currency board, or gold standard central bank or in a free banking system when interest rates were market determined, capital flows were free under a fixed exchange rate.

Western central banks started to have balance of payments troubles from the 1920s, the pound Sterling lost its place as the pre-eminent currency in the world and inflation became permanent. J M Keynes thought a current account surplus was required to make external repayments and could not grasp the concept that debt repayments or investments abroad led to an improvement in the current account automatically if interest rates were not manipulated. This false doctrine is known as the ‘transfer problem‘.

By the time IMF was created after World War II the false doctrine was fully entrenched in most universities in the UK and US. As a result, when the IMF was created by Keynes and Harry Dexter White, only current transactions were required to be free and capital controls were taken as a given.

West Germany rejected the false doctrine after World War II creating a strong Deutschmark and France after 1960 with the New Franc, under the Reuff-Pinay stabilization plan.

The UK rejected these ideas in 1979 and removed exchange controls. (Colombo/June02/2023 – Updated. Added question on IMF)

READ MORE

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Sri Lanka’s monetary meltdown will accelerate unless quick action is taken: Bellwether

Comments (2)

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  1. Praveen says:

    This article is completely wrong at the start. CBSL has NOT STOPPED Printing money- it has printed 242Bn Jan-May 2023

  2. adesilva says:

    I don’t know whether Bellweather is telling the truth but to me, who is not an Economist or a Central Banker, it is a good description of the movement of the SL Rupee against the US Dollar. If this article is translated into Sinhala and Tamil, and published in mainstream Sinhala and Tamil newspapers, a majority of Sri Lankans will be informed too.

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  1. Praveen says:

    This article is completely wrong at the start. CBSL has NOT STOPPED Printing money- it has printed 242Bn Jan-May 2023

  2. adesilva says:

    I don’t know whether Bellweather is telling the truth but to me, who is not an Economist or a Central Banker, it is a good description of the movement of the SL Rupee against the US Dollar. If this article is translated into Sinhala and Tamil, and published in mainstream Sinhala and Tamil newspapers, a majority of Sri Lankans will be informed too.

Sri Lanka to find investors by ‘competitive system’ after revoking plantations privatizations

ECONOMYNEXT – Sri Lanka will revoke the privatization of plantation companies that do not pay government dictated wages, by cancelling land leases and find new investors under a ‘competitive system’, State Minister for Finance Ranjith Siyambalapitiya has said.

Sri Lanka privatized the ownership of 22 plantations companies in the 1990s through long term leases after initially giving only management to private firms.

Management companies that made profits (mostly those with more rubber) were given the firms under a valuation and those that made losses (mostly ones with more tea) were sold on the stock market.

The privatized firms then made annual lease payments and paid taxes when profits were made.

In 2024 the government decreed a wage hike announced a mandated wage after President Ranil Wickremesinghe made the announcement in the presence of several politicians representing plantations workers.

The land leases of privatized plantations, which do not pay the mandated wages would be cancelled, Minister Siyambalapitiya was quoted as saying at a ceremony in Deraniyagala.

The re-expropriated plantations would be given to new investors through “special transparency”

The new ‘privatization’ will be done in a ‘competitive process’ taking into account export orientation, worker welfare, infrastructure, new technology, Minister Siyambalapitiya said.

It is not clear whether paying government-dictated wages was a clause in the privatization agreement.

Then President J R Jayewardene put constitutional guarantee against expropriation as the original nationalization of foreign and domestic owned companies were blamed for Sri Lanka becoming a backward nation after getting independence with indicators ‘only behind Japan’ according to many commentators.

However, in 2011 a series of companies were expropriation without recourse to judicial review, again delivering a blow to the country’s investment framework.

Ironically plantations that were privatized in the 1990s were in the original wave of nationalizations.

Minister Bandula Gunawardana said the cabinet approval had been given to set up a committee to examine wage and cancel the leases of plantations that were unable to pay the dictated wages.

Related

Sri Lanka state interference in plantation wages escalates into land grab threat

From the time the firms were privatized unions and the companies had bargained through collective agreements, striking in some cases as macro-economists printed money and triggered high inflation.

Under President Gotabaya, mandating wages through gazettes began in January 2020, and the wage bargaining process was put aside.

Sri Lanka’s macro-economists advising President Rajapaksa the printed money and triggered a collapse of the rupee from 184 to 370 to the US dollar from 2020 to 2020 in the course of targeting ‘potential output’ which was taught by the International Monetary Fund.

In 2024, the current central bank governor had allowed the exchange rate to appreciate to 300 to the US dollar, amid deflationary policy, recouping some of the lost wages of plantations workers.

The plantations have not given an official increase to account for what macro-economists did to the unit of account of their wages. With salaries under ‘wages boards’ from the 2020 through gazettes, neither employees not workers have engaged in the traditional wage negotiations.

The threat to re-exproriate plantations is coming as the government is trying to privatize several state enterprises, including SriLankan Airlines.

It is not clear now the impending reversal of plantations privatization will affect the prices of bids by investors for upcoming privatizations.

The firms were privatized to stop monthly transfers from the Treasury to pay salaries under state ownership. (Colombo/May25/2024)

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300 out of 1,200 Sri Lanka central bank staff works on EPF: CB Governor

ECONOMYNEXT – About 300 central bank staff out of 1,200 are employed in the Employees Provident Fund and related work, Governor Nandalal Weerasinghe said, with the function due to be transferred to a separate agency after a revamp of its governing law.

“When it comes to the EPF there is an obvious conflict of interest. We are very happy to take that function out,” Governor Weerasinghe told a forum organized by Colombo-based Advocata Institute.

“We have about 300 staff out of 1,200 including contract staff, almost 150 of permanent staff is employed to run this huge operation. I don’t think the central bank should be doing this business,”

The EPF had come under fire in the past over questionable investments in stocks and also bonds.

In addition, the central bank also faced a conflict of interest because it had another agency function to sell bonds for the Treasury at the lowest possible price, not to mention its monetary policy functions.

“There has been a lot of allegations on the management of this fund. This is the biggest fund of the private sector; about 2.6 million active, I think about 10 million accounts.

“When it comes to EPF, obviously there’s another thing. We obviously have, in terms of resources, on the Central Bank, that has a clear conflict because we are responsible for the members.

“We have to give them a, as a custodian of the fund, we have to give them a maximum return for the members.

“For us to get the maximum return, on one hand, we determine the interest rates as multi-policy. On the other hand, we are managing public debt as a, raising funds for the government.

“And on the third hand, this EPF is investing 90 percent in government securities. And also, interest rates we determine, and they want to get the maximum interest. That’s a clear conflict, obviously, there’s no question.”

A separate agency is to be set up, he said.

“It’s up to the government or the members to determine to establish a new institution that has a trust and credibility and confidence of the members that this institution will be able to manage and secure an interest and give them a reasonable return, good return for their lifetime savings,” Governor Weerasinghe said.

“The question is that how whether we have whether we can develop that institution, whether we have the strong institution with accountability and the proper governance for this thing.

“I don’t think it should be given completely to a private sector business to run that. Because one is that here we have no regulatory institution. Pension funds are not a regulated business.

“First one is we need to establish, government should establish a regulatory agency to regulate not only the EPF business fund, there are several other similar funds are not properly regulated.

“Once we have proper regulations like we regulate banks, then we can have a can ensure proper practices are basically adopted by all these institutions.

“Then you can develop an institution that we who can run this and can be taken back by the Labour Department. I’m not sure Labour Department has the capacity to do all these things.”

While some EPF managers had come under scrutiny during the bondscam and for questionable stock investments, in recent years, it had earned better returns under the central bank management than some private funds that underwent debt restructuring according to capital market analysts with knowledge of he matter. (Colombo/May24/2024)

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Desperate Sri Lankans seek risky foreign jobs amid tough IMF reforms

ECONOMYNEXT – After working 11 years in Saudi Arabia as a driver, Sanath returned to Sri Lanka with dreams of starting a transport service company, buoyed by Gotabaya Rajapaksa’s 2019 presidential victory.

However, the COVID-19 pandemic in 2020 and an unprecedented economic crisis in 2022 shattered his dreams. Once an aspiring entrepreneur, he became a bank defaulter.

Facing hyperinflation, an unbearable cost of living, and his family’s daily struggles, Sanath sought greener pastures again—this time in the United Arab Emirates (UAE).

“I had to pay 900,000 rupees ($3,000) to secure a driving job here,” Sanath (45), a father of two, told EconomyNext while having a cup of tea and a parotta for dinner near Khalifa University in Abu Dhabi.

Working for a reputed taxi company in the UAE, Sanath’s modest meal cost only 3 UAE dirhams (243 Sri Lankan rupees). Despite a monthly salary of around 3,000 dirhams, he limits his spending to save as much as possible.

Sanath has been in Abu Dhabi for 13 months but had to wait six months before driving a taxi and receiving no salary.

TOUGH REALITIES

“I had to get my UAE driving license. I failed the first trial, and the company paid 6,500 dirhams on my behalf, agreeing to deduct 500 dirhams monthly from my salary,” he explained.

“So far, I have repaid only 3,000 dirhams.”

To raise the 900,000 rupees for the job, Sanath borrowed money from friends and pawned jewelry.

“I don’t know if I was cheated by the agent, but I must repay that money and also send money for my family’s expenses,” he said, glancing at a photograph of his family in a Colombo suburb.

Working night shifts in busy Abu Dhabi, Sanath said, “If I can secure 9,000 dirhams monthly through taxi driving, I will earn 3,000 dirhams in the month after deductions for the license fee and any traffic fines.”

Sanath came to Abu Dhabi with seven other Sri Lankan men through an employment agency in the Northwestern town of Kurunegala.

“Only two of us have withstood the tough traffic rules and payment deductions for offenses,” he said. Some of his colleagues are still job-hunting, while others have returned to Sri Lanka.

Sanath is one of around 700,000 Sri Lankans who have left the island in the last two years due to the economic crisis that forced the country to adopt difficult fiscal and monetary policies, including higher taxes and costly borrowing, exacerbating the cost of living.

FOREIGN EXCHANGE EARNERS

From January 2022 to the end of March 2024, at least 683,118 Sri Lankans migrated for foreign employment through legal channels, according to the Sri Lanka Foreign Employment Bureau.

They have sent $11.31 billion in remittances through official banking channels during the same period, central bank data shows.

Many Sri Lankans leave on visit visas, hoping to find jobs later, often guided by friends already working abroad. The economic crisis has pushed them to seek better opportunities abroad, despite the risks.

Sri Lankan authorities struggle to stop such risk-takers, who sometimes resort to illegal migration, despite warnings about human trafficking.

In Myanmar, 56 Sri Lankans caught in an IT job scam were detained earlier this year, and the government is still repatriating them.

At least 16 retired Sri Lankan military personnel have been killed in the Russia-Ukraine war after being misled by unscrupulous recruiters. Officials estimate that over 400 retired military officers may have left for similar reasons.

DISPERATE TO LEAVE

In March, Foreign Minister Ali Sabry warned against visiting any nation on open visas, urging Sri Lankans to emigrate only through registered agencies.

Despite the risks, many Sri Lankans are desperate to leave.

Abu Salim, a 32-year-old former rugby player, came to Dubai on a visit visa hoping for a banking job, which he never got.

Now freelancing in an insurance firm, he said, “I survive, and my relatives don’t see my struggle. It’s stressful, but still better than Sri Lanka right now.”

Suneth, a former top garment merchandiser, is also job-hunting in Sharjah after quitting his initial job in Sharjah.

“My worry is the visa. I must find a new job before it expires,” he said.

Many Sri Lankans in the UAE work multiple jobs, compromising their sleep and health to make ends meet. (Abu Dhabi/May 24/2024)

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