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Sri Lanka issuing Treasury letters confirming state debts to contractors and suppliers

ECONOMYNEXT – Sri Lanka has begun issuing letters to government contractors and suppliers confirming that they are owed money by the state so that they can obtain loans from Commercial Banks against these debts.

A media release issued by the Director Information of the Ministry of Finance, M G Jayatissa, said that unpaid bills issued in 2019 and 2020 and registered up to May 31, 2020, will qualify for this scheme.

The letter will be issued by the Treasury to the Commercial Bank nominated by the relevant contractor. The contractor should open a special account for this purpose at the nominated bank.

The Treasury will, from time to time, release the required funds to the relevant Ministry or Department to pay these bills, the announcement said.

These monies, amounting to several billion rupees, will be released only through the special accounts created for the purpose, it added.

There were 240 billion rupees of arrears due to contractors for work carried out for the government in the past, Minister BandulaGunewardene has said.

The contractors were ‘completely stuck’ due to payment delays he said.

“If the government has approved work done by your company – let’s say for 50 billion rupees – for that, a bill is given,” Minister Gunewardene explained at a Cabinet press briefing held in June.

“A bill that has to be settled (nirawul kala yuthu bill pathak). Against this concessionary credit is given.

“Until the government settles those bills in a future budget, instead of keeping a paper, the opportunity to turn the paper into money has been given (kadadasiya deelar mudal tikker ganna).

“Then they can start their business again.”

It is not clear how much of the bills would be discounted at the central bank.

(Colombo, July 14, 2020)

Reported by Arjuna Ranawana

 

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