Forex crisis hits vital export sectors as shippers demand payment in dollars -Sunday Times
The crisis over lack of US dollars in Sri Lanka’s banks has spread to the export sector with shipping lines demanding that their freight charges be paid in dollars.
Leading exporters, including those in the tea and rubber sectors, have been formally and informally informed that clearance of the shipments could be arranged only if US dollar payments are made.
Exporters in turn have raised the issue with the Export Development Board (EDB), the Central Bank and the Ceylon Association of Shipping Agents (CASA) which represents the shipping industry.
Leading exporters said they were already affected with the reduction in number of shipping lines coming into the country and if they were compelled to pay in US dollars they would run into a bigger crisis.
Tea Exporters Association Chairman Sanjaya Herath told the Sunday Times the exporters were concerned about the possible impact of the move at a time when the production cost was increasing.
A leading rubber exporter said the demand came at a time when the country was fetching a good price for rubber exports and they would run into issues if they could not find shipping facilities for the want of US dollars.
He said already some of the shipping lines had informed them of the decision and, therefore, the industry was concerned about the move.
Fish and garment exporters are among the others who are affected.
The CASA said that due to the dollar shortage, the shipping industry was facing many challenges.
“The current US dollar shortage in the banking system has made it difficult to convert any rupee collections of freight to US dollars in order to make the remittances to principals. Hence shipping lines are forced to request exporters to pay freight in US dollars,” the CASA said in a statement to the Sunday Times.
It warned that adverse effects of the delay in paying the principal would be shipping lines receiving limited allocation for Colombo exports and instead that allocation would be provided to regions where collections could be repatriated easily and without delays. This would mean that Sri Lankan exporters would be unable to ship out goods to meet client deadlines. In the long run, this would lead to losing the space allocations to other regions and Sri Lankan exports would be adversely affected.
“The average value of export freight per month is US$ 100 million and it is vital for shipping agents to retain foreign funds held in Principals’ accounts to meet on going disbursements as well as remit funds to Principals in accordance with the Agency Agreements between Principals and Shipping Agents,” the CASA added.
EDB Chairman Suresh de Mel told the Sunday Times that exporters had raised their concerns over the developments and they were trying to resolve the crisis.
The move comes as the latest Treasury statistics showed that exports were gradually increasing. Accordingly industrial exports grew by 24.2 percent to USD 6,093.2 million, agriculture exports by 16.5 percent to USD 1,765.5 million and mineral exports by 115.3 percent to USD 30.7 million.
Part of the government’s economic recovery plan has been to increase exports.