The local businesses urged the Central Bank this week to look at the possibility of further extending the moratorium, so that more breathing space is provided to settle the loans.
According to the National Trade Protection Council, the borrowings from SMEs have reached Rs.1,000 billion, which the sector is struggling to pay back, due to the prevailing challenges in the national economy.
The council’s President Mahendra Perera shared that the members are continually complaining about their inability to service their borrowings at the prevailing high-interest rates.
The moratorium offered expires on December 31, 2022.
The council asserted that the moratorium has failed to give the desired results, mainly due to the grim macroeconomic circumstances.
“We requested the governor to extend the moratorium. What we asked for was to create a win-win situation for us and for the banks. If not, the banking sector in this country would also fall,” said Perera.
The council is of the view that at least 20,000 SMEs would be forced to shut down by January, if no action is taken by the government to delay the repayment of interest and capital on the loans taken by the sector.
Perera shared that Central Bank Governor Dr. Nandalal Weerasinghe had indicated to local business associations on Thursday that efforts would be taken to look into the possibility of obtaining the assistance of agencies such as the Asian Development Bank, once the relief from the International Monetary Fund is obtained.
The National Trade Protection Council has requested a reduction of interest rates and to keep the borrowing rate at 15 percent throughout 2023, while partly and fully wavering the interest during settlements.
The council also requested the Central Bank to not allow the financial institutions to demand additional security to cover the interest.