SMEs seek to devise selection criteria for beneficiaries of 2024 budget facility
Sri Lanka’s small and medium enterprises (SMEs) hit by COVID-19 and the economic crisis are currently struggling for survival – while many others have shut down all together.
Some 70 per cent of around 1.3 million SMEs with 2.2 million employees contributing to more than 50 per cent of the country’s GDP are now in more debt than any time before.
These entrepreneurs have been faced with restrained consumer sentiment, inflationary domestic conditions, high costs of production along with multifaceted administrative and operational challenges, and excessive cost of finance triggering from high interest rates
State Finance Minister Shehan Semasinghe noted that the government has considered the present plight of SME’s in providing some relief for them via the 2024 budget proposal.
Outlining the rationale behind the Rs.50 billion budgetary allocation, he disclosed that its focus was to support SMEs, which constitute over 50 per cent of the country’s economy.
A sum of Rs. 30 billion has been earmarked for their rehabilitation, divided into two segments. A facilitating institution, responsible for issuing guarantees, is set to be established in January under the Ministry of Finance.
An estimated expenditure of Rs. 50 million is allocated for this purpose, alongside an additional Rs. 50 million designated for providing financial facilities at subsidised interest rates.
It is for the first time that a Rs. 50 billion budgetary allocation has been made for the development of small and medium enterprises affected by successive crises, said President of the Chamber of SMEs Nawaz Rajabdeen.
He commended the sizeable allocation made by President Ranil Wickremesinghe through budget 2024 to revive and reform micro and small enterprises following the 2022 crises.
President of the National Trade Protection Council (NTPC) Mahendra Perera told the Business Times that SME’s were now in a debt trap of 7 per cent low interest loans taken during a time when interest rates were kept down by authorities.
The finance ministry should devise a criteria in selecting the eligible SMES for the new concessionary scheme as the previous financial facility given to entrepreneurs had been misused.
Many such enterprises never thought they will have to pay interest on interest in the debt moratorium because it was not publicised by the Central Bank, he alleged adding that several SME had to face parate executions enforced by banks.
An estimated expenditure of Rs. 50 million is allocated for this purpose, alongside an additional Rs. 50 million designated for providing financial facilities at subsidised interest rates.