Tea shipments to Russia, one of the biggest markets for Sri Lanka, are now at a complete standstill as a result of developments following the economic crisis in that country and the sharp devaluation of the rouble, leading tea traders said yesterday.

Exporters do not want to take the risk of consigning more tea to Russia until their outstandings are cleared by importers in that country. While the Central Bank estimates such dues at around US $ 20 million, the trade places a higher figure of $ 30 million.

"The Russian buyers are unable to send their remittances, even if they want to, due to the moratorium on currency convertibility imposed by their government since mid-August,'' one exporter said. "Prices are down at the Colombo tea sale in the absence of Russian demand.''

Although the winter is setting in with the consequent high demand for tea, in the context of the heavy devaluation of the rouble, the question is whether the importers can sell the stocks they already hold at a price that would enable them to meet their dollar obligations to the exporters.

Trade sources said that the Finance Ministry had reviewed the crisis at several meetings with representatives of connected government agencies and the trade. At the last meeting held on Wednesday, with Dr. P.B. Jayasundera, the Deputy Secretary to the Treasury in the chair, a special export credit insurance scheme formulated by a 4-member committee was accepted.

Three officials, S.C. Manamperuma, D-G Economic Affairs of the Finance Ministry, S.M.J. Bandara of the Plantations Ministry and Hasitha de Alwis of the Tea Board and T. Sambasivam, representing the Colombo Tea Traders' Association comprised this committee.

This scheme enables indemnifying tea exporters to Russia against payment default of up to 75% of their losses. SLECIC (the Sri Lanka Export Credit Insurance Corporation) provides the cover with the Tea Board and the exporters equally sharing the premium. This scheme will be valid for the next four months up to a ceiling of Rs. 1 billion.

The trade guardedly welcomed the export insurance scheme although one big exporter said it was only academic because nobody would want to ship to Russia under current conditions. Some exporters say the scheme can work only to the extent that commercial banks provide packing credit of at least 75% of the insurance policy value.

With exporters already tight for cash due to non-receipt of their dues from Russia, they badly need this credit, they said. They also want SLECIC to adopt a practical approach to make the scheme work.