By: Staff Writer
December 08, Colombo (LNW): The Sri Lankan government is preparing a comprehensive relief scheme targeting small and medium enterprises (SMEs) as a suspension of parate executions (foreclosures) ends on December 15.
Deputy Finance Minister Harshana Suriyapperuma revealed that the government, in collaboration with the Central Bank, is devising mechanisms to support SMEs in financial distress.
Speaking in Parliament, Suriyapperuma noted that the administration has analyzed debt data to assess the scale and nature of SME challenges. “We are finalizing a system to deliver maximum benefits to the largest number of SMEs, which will soon be submitted to the Cabinet for approval,” he said.
The analysis revealed that many bad loans date back over five years, including those incurred before the 2019 Easter Sunday bombings and during subsequent economic crises.
The country has provided multiple debt moratoria in the past, starting after the Easter Sunday attacks, followed by relief during the pandemic and the economic fallout from the currency collapse.
However, SMEs have continued to face difficulties due to reduced consumer demand, inflation, high production costs, and elevated interest rates.
The government is prioritizing SME relief through high-level discussions involving the Finance Ministry, Central Bank, and commercial banks.
The President’s Media Division (PMD) reported that a meeting chaired by Senior Additional Secretary for Finance and Economic Affairs G.N.R.D. Aponsu explored ways to support SMEs as the temporary suspension of debt recovery nears expiration.
The meeting also considered preparing a comprehensive report on SME loans to guide future relief measures.
Central Bank and commercial banks are reviewing options for extending the temporary suspension of parate executions.
This comes as SMEs, which account for 70% of Sri Lanka’s 1.3 million businesses and over 50% of GDP, struggle for survival. Many are burdened with unprecedented levels of debt, leading to operational shutdowns and financial crises.
According to former State Finance Minister Shehan Semasinghe, the 2024 budget proposal has allocated Rs. 50 billion for SME rehabilitation, emphasizing their importance to the national economy.
Of this, Rs. 30 billion will support SME recovery, while Rs. 50 million will be used to establish a facilitating institution under the Ministry of Finance in January. Another Rs. 50 million is earmarked for subsidized financial facilities to alleviate high borrowing costs.
However, Mahendra Perera, President of the National Trade Protection Council, cautioned that many SMEs are trapped in debt from earlier low-interest loans. He stressed the need for clear criteria in selecting eligible SMEs for the new relief scheme, noting past misuse of financial facilities. Perera also highlighted the impact of debt moratoria, which accrued interest on interest, leaving many SMEs vulnerable to parate executions.
The government’s new measures aim to balance SME recovery with prudent financial management, providing much-needed relief to stabilize Sri Lanka’s economy.
