Sri Lanka starts work on finance company bailout fund
ECONOMYNEXT – Sri Lanka’s cabinet of ministers had given the go ahead to start work on an asset management agency to bail out troubled finance companies, cabinet spokesman Minister Gayantha Karunathilaka said.
Finance Minister Ravi Karunanayake had proposed to set up a Financial Assets Management Agency to restructure and re-caputalise failed finance companies.
Several finance companies failed in 2009 after a property bubble fired by money printing in the post-2004 period burst.
Some of the troubled firms were taken over by other parties, and several large finance companies continue to have negative net assets due to bad loans. The asset managment agency is expected to take-over the bad loans.
Sri Lanka is expected to set up the bailout fund or special purpose vehicle before the end of 2016, under an economic stabilization plan agreed with the International Monetary Fund. (Colombo/Aug10/2016)