Sri Lankan government to implement incentives including loan restructuring for tea sector
A senior official of the government of Sri Lanka has reportedly said the government is looking at implementing a major loan restructuring plan for the tea sector which could also include a moratorium on loan repayments and the write-off on interest in some cases.
A senior official of Sri Lanka’s Plantation Industries Ministry has told the local media that the proposed relief would be given for the factory owners whose accumulated loans and interest payments stand at around Rs. 25 billion as the drop in tea prices in the past few years had resulted in their inability to repay loans.
According to the local media, the relief measures for the tea sector was approved by the Cabinet of Ministers last week with the modalities on how the proposed measures are to be implemented to be finalised in the weeks ahead.
“We will be holding talks with the Central Bank to write off 20 to 30% of the due amounts taken by those in the sector as well as with other banks on giving a moratorium between six months to a year on repayment of loans,” Co-Cabinet spokesman, Minister Ramesh Pathirana has told Daily FT.
The introduction of laws by which the auctioning of mortgaged properties of those on the sector can be delayed by a year has also been discussed.
The government of Sri Lanka is to also take Rs. 500 million from the Tea Promotions Fund to give loans to factory owners via a scheme to be implemented through the banks.
“Those in the tea sector are facing many financial problems while the entire sector too is suffering economically. The Government is keen to assist the sector to overcome these obstacles and make a speedy recovery,” he has said.
In terms of production, January-October tea crop amounted to 253.7 m/kgs recording a marginal gain of 0.98 m/kgs vis-à-vis 252.7 m/kgs of January-October 2018. On a cumulative basis, Mediums and Low Growns have shown a growth, whilst High Growns have shown a decrease YOY.
OSL take:
Sri Lanka’s tea sector has been on a gradual growth path during the past few years. The country’s tea industry has a strong history where the mark of Ceylon Tea dominated the global market. Sri Lankan authorities are once again looking at regaining the lost glory of Sri Lanka’s tea sector. The incentives planned by the government of Sri Lanka and the many trade agreements as well as trade concessions enjoyed by the country will undoubtedly help the growth of Sri Lanka’s tea industry. Foreign businesses/investors could therefore explore business opportunities in Sri Lanka’s tea industry.
| Article Code : | VBS/AT/24122019/Z_3 |