Sri Lanka mulls emergency loans to get tea auction moving

Oct 26, 2008 (LBO) – Sri Lanka’s government will guarantee loans from banks to the tea trade to revive the Colombo auctions where prices have plunged and half the teas remained unsold this week, industry officials said. The industry was also considering extending the time limit for settling cash payments for the sale of tea don the supply, chain, he said.

The two measures would ease the cash flow crisis that has hit the industry and help factory owners pay the suppliers of green leaf grown by small holder farmers.

Earlier the private tea factory owners had asked for a six billion rupee bank over draft bailout package to help them get over the crisis caused by the crash in prices.

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The decision to guarantee loans of up to five billion rupees was taken at an emergency meeting between Sri Lankan president Mahinda Rajapaksa and the tea industry Friday evening.

The central bank has been asked to summon a meeting between commercial banks and the tea trade next week to work out arrangements for the credit, Tea Board chairman Lalith Hettiarachchi said.

He said the aim is to get banks to giv