With the parate execution law's suspension coming to an end on December 15, 2024, Sri Lanka is getting ready to implement new policies to assist SMEs. Banks can sell the assets of loan defaulters through the parate execution law without a judge becoming involved, and its suspension gave struggling companies short-term respite.
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| Sri Lanka to Provide Relief for SMEs as Parate Suspension Nears End |
New Relief Measures for SMEs
In light of the challenges SMEs face, the Sri Lankan government is focusing on alternatives to mitigate the impact of the suspension's end. Key proposed measures include:
- Debt Restructuring: Working with banks to offer more flexible repayment options for defaulting SMEs.
- Access to Low-Interest Loans: Facilitating new loans at reduced interest rates to help businesses recover.
- Regulatory Reforms: Adjusting policies to better suit the financial needs of SMEs in the current economic climate.
The Challenges for SMEs
The parate suspension provided breathing room for many businesses affected by the economic crisis, including those hit hard by the pandemic and inflationary pressures. However, with the suspension lifting, SMEs face renewed pressure to meet financial obligations or risk losing collateral.
Banks have warned that while supportive measures are being implemented, the removal of the suspension could increase risk premiums, making lending more cautious and selective in the long term.
Government’s Commitment to Support SMEs
The Central Bank of Sri Lanka and the government have committed to giving SMEs top priority in their larger economic recovery plan. Officials hope to guarantee that SMEs, which are regarded as the foundation of the economy, may continue to operate and support economic growth by tackling systemic issues and providing relief methods.
These steps are anticipated to be crucial in assisting smaller enterprises and preserving consumer trust as Sri Lanka moves from crisis management to economic stabilisation.
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