Central Bank requests tea exporters to repatriate export proceeds within one month

3 October 2022 12:13 am

• CB says SL has no bridge financing lined up for next few months until IMF programme finalised 
• Says it’s unfair that Lankan exporters continue to extend credit facilities up to 180-days when LCs offered by local banks get refused
• Tea Board chief requests tea exporters to negotiate with buyers to cut down credit facilities to 90 days

Given the on-going forex crisis in the country with no significant bridge financing linedup for the next few months, the Central Bank (CB) has urged the tea exporters to convince buyers to repatriate export proceeds within one month period instead of continuing to extend the usual 180-day credit facilities.
“This is the time that the country requires your support. You need to take steps to bring down 100 percent of your export proceeds to the country within a month,” CB Governor Dr. Nandalal Weerasinghe told the 128th Annual General Meeting of Colombo Tea Traders Association (CTTA) held in Colombo last Friday.

He argued that it’s unfair that the exporters continue to extend credit facilities upto 180-days to the buyers when everyone is refusing to accept any Letters of Credit (LCs) facilities offered by local banks to finance the country’s imports. 
Given the current state of the country, he insisted on renegotiating the credit facilities offered to buyers of Ceylon Tea.

Dr. Weerasinghe noted that there’s no significant bridge financing lined up for the country until the IMF programme is finalised, which is expected to take several months.
Meanwhile, Sri Lanka Tea Board (SLTB) Chairman Niraj De Mel encouraged tea exporters to renegotiate with their buyers to cut down credit facilities to a 90-day period from the typical 180-day period. 
However, he acknowledged certain practical difficulties in repatriation of export proceeds In a shorter period particularly with regard to global supermarket chains where exporters have entered into long-term contracts.

Having said that, De Mel requested tea exporters do their utmost to support the country at this crucial juncture.
He noted that tea export earnings in the recent months rose to around US$ 110-120 million per month when compared to US$ 100 million early this year. With 95 percent of tea exports being net exports, he stressed that tea export earnings could significantly support the country to ease its forex crisis. (NF)