Shippers Council joins chorus for speedy resolution of forex crisis

• Warns both exporters and importers are impacted by critical shortage of foreign exchange
• Suggests Govt. to pursue viable alternatives than solely relying on homegrown solutions

The Sri Lanka Shippers’ Council (SLSC) is the latest to join the private sector chorus for a speedier resolution of the debilitating forex crisis.

In a statement, SLSC Chairman Russell Juriansz highlighted serious difficulties faced by its members and the private sector at large, due to the prevailing foreign currency crisis. 

“The impact of the foreign currency shortage has had a serious effect on the businesses in the country,” he said. 

SLSC reiterated its concerns and the increasingly deteriorating and alarming situation which was detailed recently in a statement by the Joint Chambers of Commerce. Several other private sector groups, too, have issued statements in recent weeks urging swifter action by the Government. 

SLSC, in a statement, said it supports and is in agreement with the concerns that have been expressed by the Joint Chambers of Commerce.

“The serious issues faced by the importers and exporters are, for example, 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,” SLSC said in its statement. 

It said 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 importers also face delays in honouring letters of credit, due to the scarcity of foreign currency, 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 will also affect longstanding 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, SLSC said 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 clearance their imports on time in order to manufacture and ship goods to meet their buyer’s deadlines, will face a continuous reduction of orders over a period of time, due to being unable to meet buyers’ schedules,” SLSC warned. 

It said Sri Lanka 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. 

In addition, 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. 

SLSC, in its statement, said while appreciating the efforts being taken by the Government to mobilise short-term funding through swaps and credit lines, 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. 

“It is now apparent that the anticipated homegrown solutions will not materialise in the short-term. We are 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. We earnestly request the Government to reconsider and put into effect alternative courses of action available to the country, for example, engaging with IMF to explore options that are available, which will give donor agencies and others the confidence that we as a country are committed to settling our overall debt,” the SLSC statement said.

“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 statement by SLSC Chairman Russell Juriansz added.