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Shippers’ Council requests Government to seek IMF support 

27 Jan 2022

The Sri Lanka Shippers’ Council, issuing a statement, has urged the Government of Sri Lanka to consider alternative courses of action available to the country, such as engaging with the International Monetary Fund (IMF), since the home-grown solutions to revive the economy are not or will not materialise.  “It is now apparent that the anticipated home-grown solutions are not or will not materialise in the short term. The council is strongly of the opinion that negotiating the restructuring of the country’s debt over a period of time would be preferable and would be a viable option as against default,” it added.  Further, it noted that the banking system, which will not be in a position to meet the needs of their customers, both importers and exporters, could eventually be faced with a serious loss of reputation if they are compelled to dishonour committed payments.  It further said: “While appreciating the efforts being taken by the Government to mobilise short-term funding through swaps and credit lines, we urge the Government to finalise negotiations on these arrangements and announce them with credibility and certainty as a matter of urgency, with a clear statement when these facilities will become available. “We, the Sri Lanka Shippers’ Council, as the apex shippers’ organisation in Sri Lanka and as a responsible industry body, request all stakeholders to engage those who are concerned, to build confidence, which if done together, will enable us to face the challenges and lead the country to economic recovery.”   The council noted that the serious issues faced by the importers and exporters of the country are the difficulties and delays in obtaining foreign currency to finance much-needed imports due to the critical shortage of foreign currency in the commercial banking system in the country.  Several regular suppliers of imports who have previously extended credit terms are now demanding confirmed letters of credit, which will add to the cost of imports.  The council said: “The council wishes to reiterate the concerns and the increasingly deteriorating and alarming situation which was detailed recently in a statement by the Joint Chambers of Commerce. The Sri Lanka Shippers’ Council supports and is in agreement with the concerns that have been expressed by the Joint Chambers of Commerce.” The importers also face delays in honouring letters of credit (LCs), due to the scarcity of foreign currency and direct payments, in turn having to incur high demurrage charges as a result of the delays in clearance of goods which have already been dispatched by suppliers and are lying in the port. Most of the goods are critical for the manufacture of export orders. Further, this impact is also felt by indirect exporters and firms providing support services for exports. It added that it will also affect long-standing relationships built over many years with suppliers, due to delayed payments resulting in a serious and irreversible loss of confidence and credibility between business partners and more importantly, the business credibility of the country itself. In addition, importers are also unable to secure new orders due to their inability to agree to firm payment schedules, which are required by suppliers.  Exporters who are faced with delays in clearing their imports on time in order to manufacture and ship goods to meet their buyers’ deadlines, will face a continuous reduction of orders over a period of time, due to being unable to meet buyers’ schedules.  The country stands to lose if and when buyers decide to move their manufacturing to other countries which are closer to the end user, in order to overcome supply chain bottlenecks due to the inconsistency and inability of local exporters to meet deadlines. 


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