Government casts draft application on EU fishing ban

By Charumini de Silva 

Sri Lanka will come one step closer to boosting much-needed exports when the Government hands over a draft application to European Union (EU) officials during a decisive meeting this week appealing to lift the ban on local fishing products that could potentially allow the economy to reduce its dependency on borrowed reserves.  

The fishing exports ban on Sri Lanka will be discussed and a draft application will be handed over to the Working Group to be presented in their Parliament, a Foreign Affairs Ministry senior official said.

“Sri Lanka’s fishery ban application will be discussed and a draft application handed over during the meeting on 21 April,” Foreign Affairs Ministry Acting Director General, Spokesperson’s Office and Public Communication Division Satya Rodrigo told the Daily FT. 

The move to hand over a draft application comes after many months of talks between the two parties. Germany and several other countries have already pledged to support Sri Lankan efforts to roll back the ban that was issued for unregulated fishing.

Central Bank Governor Arjuna Mahendran told reporters ahead of flying to Washington to attend the Spring Meetings of the International Monetary Fund (IMF) policymakers are depending on an upsurge in foreign earnings from investment and exports to reduce dependency on borrowed foreign reserves. 

“The mission welcomed the recent tightening of monetary policy given the steady increase in core inflation and high private credit growth. Given the long lags in monetary transmission and continued increase in core inflation and private credit growth, however, the Central Bank of Sri Lanka (CBSL) should be prepared to tighten policies further if these trends continue. The mission also recommends the CBSL take active steps to rebuild non-borrowed reserve buffers,” the IMF said following a staff evaluation earlier this month. 

In response Mahendran insisted that increased inflows from investment and exports in the second half would create space for the Central Bank to borrow from commercial markets to shore up non-borrowed reserves. However, he noted there were no immediate plans to tighten rates.

“To increase non-borrowed reserves we have to buy dollars from the market. If the seafood ban is reversed and exports increase in the second half we can build up real reserves,” he said. “The rupee was floated to help exports become more competitive.”

The EU announced a ban on imports of fisheries products from Sri Lanka, its second biggest importer in the sector, in October 2014 for violating the international fisheries law and engaging in illegal fisheries activities. 

Sri Lanka received a ‘yellow card’, a strict warning, in November 2012, as the country was not complying with international rules on illegal fishing and had inadequate control systems. The ban went into effect from 14 January 2015, over the failure of the previous government to prevent local fishermen from violating international fishing laws. 

However, with the new Government taking control last year they took proactive measures to get the ban lifted as the country was incurring a huge loss of revenue from the imposed ban on fishery export to the EU.  

According to Fisheries Ministry, Sri Lanka’s total fish exports dropped by 34% last year compared to 2014, while the value dropped by 29%. 

Country’s fish exports to the EU make up 68% of its total fish exports, which brings in $160 million annually. Sri Lanka is one of the biggest exporters to the EU of high value fishery products such as fresh and chilled swordfish, tuna and tuna-like species. The remaining 32% is sent to the US, Japan and other non-EU countries.  

The 2016 Budget proposed a deep sea fishing licensing scheme where one license holder will have to engage in collaboration with at least 100 people in the fishing community.

As per international law, Sri Lanka has the authority to send 1,615 boats to the international waters for fishing.