The Central Bank of Sri Lanka (CBSL) is in discussion with the International Finance Corporation (IFC) to obtain $60 million to provide concessional loans to the Micro, Small and Medium Enterprises (MSMEs), Minister of Industries Dr. Ramesh Pathirana said.

Speaking in Parliament yesterday (7), the minister said that to address the liquidity issue faced by the MSME sector of the country, CBSL has initiated discussions with the IFC to obtain $60 million to provide low-interest loans to the sector.

He said that the Ministry of Industries has found out that there are three main problems faced by the MSME sector industries in the country which are liquidity, land and the issues related to obtaining licences for doing business. 

According to the CBSL annual report, in 2022, the activity of MSMEs that operate in a wide range of segments was critically impacted by reduced demand amidst uncertainties, rising inflation and wages, a depreciated exchange rate, unavailability of raw materials, interruptions to power and other utilities, and heightened financing costs, among others. 

As a result, national output, employment and livelihoods were severely affected, raising the need for the implementation of urgent remedial measures to support MSMEs through this difficult period.

In order to fulfil the liquidity requirement of SMEs, around $13.5 million of the undisbursed amount of the 'small and medium-sized enterprise line of credit loan scheme was reallocated to the emergency response initiative by the Finance Ministry in 2022.

Moreover, Pathirana said that the Finance Ministry has already informed the banks to provide the maximum relief to the MSME sector while maintaining the liquidity levels which has paved the way for several concessional loan programmes by the banks.

He added that Rs.2 billion will be provided as concessional loans to the MSME sector through the funds at the Ministry of Industries.

Also, speaking in Parliament, the opposition MP Dr. Harsha de Silva said that 400 properties have been claimed by the banks in the first four months of 2023 by executing the Parate law for unsettled loans.

He said that some properties claimed by some banks are sold at low values at auctions as a result of secret discussions invol hand.

He proposed the introduction of a law similar to the US Chapter 11 in Sri Lanka in the long run and emergency regulation in the short run to allow the MSMEs to restructure their debts as the sector fell because the country went bankrupt due to the policies of the former government.

Minister Pathirana said that the Finance Ministry is looking to temporarily amend the Parate law and provide a grace period for the MSMEs to repay their loans.