Essential food importers struggling to settle US $ 50mn owed to suppliers

Sri Lanka’s essential food importers are struggling to settle US $ 50 million owed to their suppliers, imported under credit terms, due to the ongoing foreign exchange shortage while facing large exchange losses, owing to the depreciation of rupee.

“US $ 50 million worth of essential items that we have brought through credit terms have already sold, based on Rs.203/US dollar exchange rate. We were not informed there were no US dollars when we imported these goods. At the same time, the rupee has depreciated by 40-50 percent over the period, with increasing threat of bankruptcies among our trades,” Essential Food Importers and Traders Association (EFITA) Spokesperson Nihal Seneviratne told reporters in Colombo on Friday. 

Although earlier suppliers shipped their goods based on trust, Seneviratne noted that the suppliers are now demanding payments in advance to ship essential goods, limiting essential food imports 
to the country.

At present, there are stocks of essential imported food items (except for food items) sufficient for a one-month period in the country. Thereafter, Seneviratne noted that the country needs to rely on essential goods imported from India, under the US $ 1 billion credit line.

“We are currently in negotiations with the Trade Ministry. We are still not aware of the allocation for essential food items under the US $ 1 billion Indian credit line,” 
he added.

According to the EFITA, the country requires US $ 200 million to import essential goods per month.