No major impact on trade and opening of LCs

Frontier Research says that the temporary suspension of repayment of foreign debt will not have a major impact on external trade and opening of Letters of Credit. 

“Since LCs are likely to be excluded from this exercise, this shouldn’t directly affect those payments being cleared, as long as the banking system can gather enough dollars to clear LCs as they come due. We have not seen downgrades to RD/SD having a direct impact on LCs in other countries. However, given the uncertainty about Sri Lanka and the future debt arrangement, it is possible that pre-payment is requested for imports in the near term,” Frontier Research said.