Sri Lanka’s tea exporters have slammed the government’s move to impose penalty interest rates on exporters who fail to use the export proceeds to settle accommodations within 90 days.

Chairman, Tea Exporters Association of Sri Lanka (TEA), Rohan Fernando speaking to The Nation Gain criticized the move stating that it would hamper the entire industry and alleged that they were not consulted before the move was implemented.

According to the new circular which came into effect from June 1, exporters with packing credit facilities who do not use export proceeds to settle the accommodations after 90 days will be charged a 5 percent penal interest and then 2 percent for every month.

Fernando pointed out that tea exporters would be affected by the penalty since their payments are generally delayed. He stated that around 30 to 40 percent of the tea exports were to countries such as Russia, Syria and Iran which were plagued by economic crisis, political instability and economic sanctions.

He noted that these countries had often delayed payments owing to the respective issues but had continued to back Sri Lanka’s tea sector. “These are traditional markets and we cannot afford to move away from them,” he said.

Accordingly, the Executive committee of TEASL had decided to write to the Tea Board explaining their concerns. “We would urge the Chairman of the Tea Board to take the issue up with the relevant officials.

Meanwhile, Sri Lanka’s earnings from tea exports, which declined from August 2014, year on year, continued to decline by 27 percent in March 2015 as well to US$ 113.4 million, latest statistics showed. Accordingly, during the first quarter of this year, revenue from tea exports had slipped by 13.3% to US$ 335.3 million.

The Central Bank stated that this reflected the continuous decline in demand from major tea importers especially Russia and the Middle East, which were severely affected by the significant decline in international oil prices.