The National Trade Protection Council that represents over 30,000 Small and Medium Scale Enterprises (SMEs) in Sri Lanka requested President and Finance Minister Ranil Wickremesinghe to intervene to extend their moratorium which is ending on December 31 2022.
President, National Trade Protection Council ( NTPC) G. Mahendra Perera said that as per the available information SMEs in the country have a total borrowing of nearly Rs. 1,000 billion from banks and non-financial institutions. “However we are unable to pay this back immediately due to the current economic situation and the negative business environment.”
The NTPC met Governor Central Bank Dr. Nandalal Weerasinghe yesterday and brought up this issue requesting him to look at the possibility of extending the capital repayment, on borrowings until end of 2023, extension of taking Parate action until end 2023 and also stall any legal action taken also until the end 2023.
“We also requested the CBSL assistance to extend the capital repayment on borrowings until the end of 2023.”
He recalled that SMEs account for over 52% of Sri Lanka’s GDP and more than 45% of Sri Lankan labour force (direct employment 4.5 million).
“However we are not happy with the response from the government in this regard as we feel that he is taking the side of the banking community and not looking at this issue from a SME’s perspective. Hence now we are appealing to the Finance Minister for his mediation.
“If this issue is not addressed the SME sector will fall resulting in a job loss of over 10,000 and it may even lead to unrest in the country,” said Secretary National Trade Protection Council, Lalith Lokuge.
“We believe that at least 20,000 SMEs will be forced to discontinue operations by January 2023, if no action is taken by the Government to delay the repayment of interest and capital on the loans taken by them. Our members are continually complaining about their inability to service their borrowings at the prevailing high interest rates, despite the fact the Moratorium given by the Government will come to an end by December 31, 2022.”
“The moratorium has failed to give the desired results, mainly due to the continuing macroeconomic circumstances. We believe that the normalization of the economy is paramount for the borrowers to improve their repayment capacity.”
He also said that banks have declared profits and hence banks can survive even after extending this moratoria for a further period of one year.