Cash-strapped Sri Lanka to sell long-term ‘golden’ visas

Cash-strapped Sri Lanka announced on Tuesday it would sell long-term visas to attract desperately needed foreign currency after the island nation ran out of dollars to pay even for food and fuel.

Foreigners who deposit a minimum of $100,000 locally will be granted permission to live and work in Sri Lanka for 10 years under the “Golden Paradise Visa Program”, the government said.

But any income from the scheme is likely to be dwarfed by the scale of the current crisis, with acute shortages of food, fuel and medicines that have triggered widespread protests.

Thousands of people remained camped outside President Gotabaya Rajapaksa’s seafront office to demand his resignation.

Trading at the Colombo Stock Exchange was halted three times Tuesday as prices plunged, with the blue-chip S&P index closing down 9.75 percent.

That came on top of a near-13 percent drop on Monday, the first day of trading since a two-week break during which the government hiked interest rates and defaulted on its $51 billion foreign debt.

Equities have shed 47 percent of their value since January, with the local currency falling by about 40 percent against the greenback in the past month.

Fuel prices have almost doubled since December and the government on Tuesday announced an 81 percent increase in the price of cooking gas.

Cement, soap and detergents went up on Monday by between 17 and 100 percent.

The latest price increases came as the main opposition launched a six-day protest march from the central city of Kandy to the capital, a distance of 115 kilometres (72 miles).

Under the programme, the money payable will need to be deposited in a local bank account for the duration of the visa, the government said in a statement.

“This scheme will help Sri Lanka at a time when we are facing the worst financial crisis since our independence,” media minister Nalaka Godahewa told reporters in Colombo.

The government also approved the granting of five-year visas to any foreigner spending a minimum of $75,000 to buy an apartment on the island.

With the crisis worsening, the government also said it was ready to consider political reforms, including constitutional amendments that could reduce the authority of the president.

Gotabaya Rajapaksa gave himself sweeping powers to appoint and sack ministers, judges and public servants after his 2019 election.

His government also rolled back democratic reforms that had given statutory independence to the police, civil service, election commission and the judiciary.

Sri Lanka’s economic collapse began to be felt after the coronavirus pandemic torpedoed vital revenue from tourism and remittances.

Utilities unable to pay for fuel imports have imposed lengthy daily blackouts to ration power, while long lines snake around service stations as people queue for petrol and kerosene.

Hospitals are short of vital medicines, the government has appealed to citizens abroad for donations and record inflation has added to everyday hardships.

Sri Lankan officials arrived in Washington last week to negotiate a bailout with the International Monetary Fund.

Meanwhile, Sterling held near its lowest levels since 2020 on Tuesday against a broadly firm dollar, with worries about Britain’s economic outlook exacerbated by latest debt numbers and fears that COVID-19 restrictions in China will hurt world growth.

Sterling was down 0.6% at $1.2660 at 1430 GMT, after falling to its lowest versus the dollar since July 2020.

It is down 3.7% this month against the dollar and set for its biggest monthly fall since July 2019, with growing signs of a weakening economic outlook hurting the currency.

Data on Tuesday showed British government borrowing in the recently ended 2021/22 financial year was almost 20% higher than forecast by the country’s budget office last month.

That underscored the challenge for finance minister Rishi Sunak, who is under pressure to give new help to households and businesses hit by surging inflation, but who says he wants to fix the public finances after his COVID-19 borrowing surge.

“There is little sign of the pound moving back into favour with this morning’s borrowing data highlighting the difficulties of the Chancellor in softening the impact of the cost of living crisis given the increased weight of debt maintenance,” said Jane Foley, head of currency strategy at Rabobank.

Agencies