Granting of Open Account for select imports reawakens grey forex market: CB Chief

By Charumini de Silva

The Central Bank Governor Dr. Nandalal Weerasinghe last week claimed the new directive to relax the Open Accounts for selective imports has reawakened the grey forex market.

“The Hawala and Undiyal business is happening all the way through the eased regulations on the Open Account for imports,” he told journalists.

The Finance Ministry last month lifted a ban on Open Account food imports, following strong lobbying by the essential commodity importers. 

Dr. Weerasinghe claimed as a result of the directive the grey forex market is burgeoning with help from Hawala and Undiyal channels again.

“We can see that Hawala and Undiyal business is thriving again, while the black-market premiums are also growing steadily,” he stressed. 

Explaining the consequences of the move, the Governor pointed out that if these channels are backed by the essential commodity importers via Open Accounts, it will create an unnecessary grey market, which was curtailed as a result of the measures first introduced by the Central Bank on 29 April.

When asked if it would not be fair for the importers to bring in the essential commodities when the banks do not allow Letters of Credit (LCs), Dr. Weerasinghe denied the allegations.

“They requested banks to at least finance those imports and we have arranged those too,” he explained.

Dr. Weerasinghe also recalled that there were threats that said the measures introduced will result in a shortage of goods — but there was no scarcity.

“We must prioritise if potato, onions, and lentils are more important, or the diesel and petrol given the multiple crises. Even if you bring down this essential food to the warehouses, without petrol it cannot be delivered to the public,” he pointed out.

He said the grey market players are diverting the forex through Open Accounts and the essential food items are sold to the consumers including the hidden prices.

“They do not care about the hidden prices included in the goods they sell to customers. If you all pay Rs. 400, that additional cost is already hidden in the dhal, sugar and everything imported into the country,” he claimed.