October 19, Colombo (LNW) Sri Lanka’s micro, small, and medium enterprises (MSMEs) have urged the newly formed government to initiate critical reforms in MSME financing within the next 60 days, emphasizing the need for interest waivers to support struggling businesses.

The call for action comes as the temporary relief from the suspension of parate execution is set to expire on December 15, threatening the stability of many MSMEs.

 The Ceylon Federation of MSMEs, led by President Mahendra Perera, has appealed for the waiver of accumulated interest on loans taken from 2019 to 2024 to alleviate the financial pressure on these enterprises.

Perera emphasized that MSMEs should be granted long-term repayment options with interest rates capped at 10%, and suggested that total interest payments should not exceed 50% of the original loan amount.

The federation estimates that MSMEs currently owe around Rs. 250 billion, with 60% of these loans classified as non-performing, and the interest amounting to approximately Rs. 60-70 billion. 

Perera also recommended amending the outdated 33-year-old parate execution law, proposing its temporary suspension for a year, and suggested returning auctioned properties to original owners to facilitate debt repayment.

In addition, the federation’s Vice President, S.N. Raghvan, highlighted the need for a comprehensive overhaul in MSME financing. He argued that although banks have recorded high profits recently, MSMEs’ contribution to the country’s GDP has declined sharply, indicating a dire need for financial reforms.

Raghvan proposed utilizing the Employees’ Provident Fund (EPF) and Employees’ Trust Fund (ETF) to secure loans for MSMEs, similar to measures taken during the domestic debt restructuring process. He stressed the urgency of implementing these changes within the next 60 days to ensure MSMEs are prepared for the country’s external debt repayments set to begin in 2028.

He concluded that a robust and well-supported MSME sector is crucial to prevent future economic challenges, urging the government to lay the groundwork for long-term financial stability in the sector.

Looking ahead to Sri Lanka’s external debt repayments beginning in 2028, Raghvan asserted the need for a strong MSME sector to avoid another default. 

“When we reach 2028, the MSMEs need to be stronger and prepared to handle the payments we have agreed to start repaying. Give them the platform and financial support they need, so they can be ready for what’s ahead,” he said.

October 19, Colombo (LNW): The Ministry of Finance has clarified that recent reports about increased taxes on several imported goods are inaccurate. This clarification follows rumors that taxes on certain imported items were raised, effective from October 14 to December 31, 2024.

According to the Ministry, the confusion arose after the previous gazette on the special commodity levy expired on October 13, prompting a routine renewal of the gazette on October 14, 2024. The Ministry confirmed that the concessionary tax on imported lentils, which remains at 25 cents, has not been altered, along with tax rates for four other products.

This extension aims to support local industries, such as fishing and fruit cultivation, while also addressing foreign exchange concerns.

October 19, Colombo (LNW)The People’s Action for Free and Fair Election (PAFFREL) has urged candidates running for the general election to appoint a dedicated individual to manage their income and expense reports. PAFFREL Executive Director Rohana Hettiarachchi highlighted the importance of this step to avoid the challenges faced by some candidates during the last presidential election when submitting financial reports.

Hettiarachchi stressed that appointing a separate financial manager right after the election could help minimize difficulties and ensure smoother submission of financial documentation. He emphasized the need for candidates to be mindful of this issue to avoid any complications.

His remarks came in response to a media inquiry yesterday .

October 18, Colombo (LNW): Media Minister Vijitha Herath stated yesterday (17) that the government is prepared to release the reports of the Presidential Commission of Inquiry (PCoI) into the Easter Sunday attacks at the appropriate time. He emphasized that the reports would not be disclosed based on the demands of individuals but would be done responsibly.

Addressing the media, Minister Herath criticized former MP Udaya Gammanpila, comparing his behavior to a child seeking attention by throwing toys, and urged the public not to be alarmed by such actions. He assured that the reports would be submitted when necessary, in line with the government’s duty to handle the matter properly.

October 18, Colombo (LNW): Senior Professor Wasantha Athukorala from the University of Peradeniya’s Department of Economics and Statistics has disclosed that the current Sri Lankan government is forced to borrow extensively to repay loans incurred by previous administrations. Addressing concerns about large-scale borrowing, Professor Athukorala emphasized that much of the current borrowing is to settle Rs. 4,859 billion in maturing Treasury Bills and Bonds due over the next year.

He revealed that the previous government had borrowed approximately Rs. 800 billion per month from the domestic market without a clear repayment plan. As a result, the current administration must continue borrowing to service these debts, particularly the Treasury Bills and Bonds maturing in the coming months.

Professor Athukorala highlighted that between 2015 and 2019, nearly US$ 12 billion out of the US$ 17 billion borrowed through International Sovereign Bonds came from that period, accounting for 70% of foreign debt. With Sri Lanka’s credit rating downgraded, the country can no longer borrow from international markets, further complicating the repayment process.

Despite restructuring efforts, the country remains burdened by substantial loans from both foreign and domestic markets. Domestically, the government raises funds weekly through Treasury Bills and Bonds to cover financial obligations. Looking ahead, Sri Lanka will need to repay Rs. 3,774 billion in Treasury Bills from November this year to November next year, and Rs. 13,237 billion in Treasury Bonds by 2045, with Rs. 1,125 billion maturing next year.

Professor Athukorala stressed the importance of establishing a sustainable debt management plan. He suggested that the government gradually reduce monthly borrowings to Rs. 200 to 250 billion over the next five years to avoid future crises. He also noted that while previous governments misused borrowed funds, there are signs of reduced wasteful spending under the current administration, which is a positive development.

October 18, Colombo (LNW): A long-delayed housing project, initially launched to assist 500 families displaced by the 2004 tsunami, will soon be handed over to its beneficiaries. The project, funded by the Saudi Arabian government in 2009, faced significant delays despite the houses being ready since 2011, following a court ruling that paused the distribution process.

The project, located in the Ampara district, includes 500 residential units along with essential infrastructure such as a school, supermarket complex, hospital, mosque, and other amenities.

During a recent discussion between President Anura Kumara Dissanayake and Saudi Envoy Khalid Hamoud Alkahtani in Colombo, it was agreed to expedite the handover process to the families who have waited for years.

The houses were originally presented to then-President Mahinda Rajapaksa in 2011 by the Saudi Envoy. However, the distribution was halted due to legal challenges. The Saudi Arabian Embassy has since been in continuous discussions with various Sri Lankan governments to resolve the issue.

A decision has now been made to proceed with the handover, marking a significant step towards fulfilling the long-standing promise of providing these homes to the tsunami-affected families. Saudi Arabia has expressed eagerness to see the beneficiaries receive their new homes at the earliest opportunity.