Sri Lanka extends deadline for SME debt moratorium

sri lanka rupee notes coin

ECONOMYNEXT- Sri Lanka’s central bank will extend the deadline for a loan moratorium and new credit program for small and medium sized enterprises (SMEs) to February 10, a top official said.

Deputy Governor H. A. Karunaratne said the deadline was extended from January 31, and a fresh circular will be issued soon.

He said SME loans make up 12-13 percent of the 8 trillion rupee total credit extended.

The central bank, following directions from the president and prime minister, is asking banks to extend a one year loan moratorium for both performing and non-performing loans, to boost economic growth.

Further, those with performing loans and credible business proposals are able to avail of a fresh five year loan of up to 300 million rupees at the average weighted prime lending rate, a lower rate banks charge from their low-risk customers.

Last week, the Confederation of Micro, Small and Medium Industries said the short period given to register for the program was ‘deadly’.

SMEs make up over 70 percent of Sri Lanka’s businesses, contributes 52 percent to gross domestic product and provides 45 percent of all employment.

The economy has been growing at a slow rate of 2.6 percent in the first nine months of 2019. The central bank is expecting growth to reach up to 4 percent in 2020.

Ratings agency Fitch had said not many SMEs will take up the moratoriums, as banks had already restructured many stressed loans in the past. (Colombo/Jan30/2020)