Sri Lanka’s Sanken gets offshore finance for construction imports amid trade controls
ECONOMYNEXT – Sri Lanka’s Sanken group said it has secured offshore import financing facility suported by Hatton National Bank and Peoples’ Bank to complete a construction project which was hit by import controls.
Capitol Twin Peaks, a 50-storey twin tower development is now able to import building material with the help of a Usance letter of credit facility with a 720 day payment settlement, secured from an offshore partner.
The facility is supported by Hatton National Bank and People’s Bank.
Sri Lanka imposed import controls in April after unprecedented money printing from March and inadequate defence of a soft-pegged exchange rate regime led a spike in credit and a steep fall in the currency and a downgrade of the sovereign rating.
Meanwhile Sanken said it had imported key materials for the superstructure ahead of schedule to avoid foreign currency fluctuation risks.
“All balance raw material that are to be imported are getting cleared by relevant local authorities at present, leaving no reason for the work process to slow down,” Managing Director – Capitol TwinPeaks, Rohana Wannigama said in a statement.
“Through the financial partnership with HNB and People’s Bank, we aim to expedite the remaining construction work, whilst also adhering to Central Bank regulations, in order to support the continued growth of the Sri Lankan economy.”
As a result of exchange restrictions construction firms were facing difficulties in opening letters of credit (LC) and some imports have also been suspended leading to delays in construction.
“However, the Sanken Group has been able to structure a Usance LC facility through their bankers and an off-shore partner to overcome this foreign exchange outflow restriction whilst ensuring an uninterrupted inflow of imported raw materials necessary for Capitol TwinPeaks…” Sanken said.
“Capitol TwinPeaks has been able to continually inject foreign exchange into the local economy through foreign currency investments made directly by the project’s expatriate and foreign buyers.” (Colombo/Aug21/2020)