Business

‘$ 120 mn promised for essential imports’

  • Trade Minister says Central Bank pledged amount through banks

By Imesh Ranasinghe

Central Bank of Sri Lanka (CBSL) Governor Dr. Nandalal Weerasinghe has promised to provide $ 100-120 million to importers of essential items through banks, after the importers warned of food shortages following the ban on open account transactions, Trade Minister Nalin Fernando said.

Speaking to reporters on Tuesday (24), the Minister said that the importers of essential items have informed him that the country will start to have food shortages within two weeks due to the suspension of transactions via open accounts and Documents against Purchase/Acceptance (DP/DA) funded through dollars from informal channels. 

This move was implemented by the CBSL from 20 May onwards in an attempt to crack down on the informal channels or black markets through which most importers purchase dollars, as banks are struggling to earn sufficient dollars.

“The importers informed us that they could conduct transactions through the banks only if the banks provide them with dollars at the required time,” Fernando said.

Therefore, he said, he had held a meeting with importers and the CBSL Governor on Tuesday (24), where the Governor had promised a continuous supply of dollars to them through banks to fund imports.

The importers have requested $ 100-120 million to be issued monthly through the banks for the import of essential items.

During a series of interviews conducted by The Morning Business at the Pettah market on Tuesday, a large-scale importer said that the ban on transactions based on open accounts and DA/DP will make it impossible for them to import essential food items to Sri Lanka, as the banks do not have the necessary US dollars to facilitate imports, adding that there would be a severe food shortage by the end of June.

“The Prime Minister said there will be a severe food shortage by August, but by banning Open Account transactions for imports, the food shortage will occur by the end of next month when the stocks run out,” he added. 

Another essential food distributor told us that, unlike dhal and sugar, commodities such as onions cannot be stored for a long period of time. Therefore, dollars need to be provided regularly by the banks, otherwise, the supply chain would be disrupted when the stocks run out or go stale.