Dubai Banks have pledged to help out Sri Lankan exporters with offshore credit facilities. Sri Lankan traders have felt at a competitive disadvantage in export markets because of the high cost or poor availability of credit to finance transactions.

They have also been loath to supply against letters of credit between six and 12 months due to high interest rates. Alternatively, if they factored the cost of such L/Cs into a transaction, they would not be price competitive compared with their competitors in Africa and South East Asia.

Lower cost credit

But following a recent visit to Dubai by Sri Lanka's food and commerce minister, Kingsley Wickremaratne, several banks have agreed to make credit facilities available at competitive interest rates in convertible currencies such as US dollars, Deutschemarks and Japanese yen. Abu Dhabi Islamic Bank, HSBC and Dubai Islamic Bank are amongst those banks that will offer the facility.

Lower cost credit facilities should help sharpen the competitiveness of Sri Lankan exports of textiles and clothing, rubber, tea and several foodstuffs to markets in the Middle East, Africa and central Asia.

The views expressed in this article are those of the author and not necessarily those of ICC or of the other partners in DC-PRO.