President Ranil Wickremesinghe said that it is not feasible to indefinitely maintain the temporarily suspended Parate law. Consequently, a new Bill will be introduced to address bankrupt businesses.
The President said that the proposed Bill includes provisions for restructuring loans taken by Micro, Small and Medium Enterprises (MSME). A new institution named “Enterprise Sri Lanka” will be set up to provide support and assistance to Micro, Small and Medium-Scale Entrepreneurs. The President said that the Government is committed to encouraging and empowering these entrepreneurs in Sri Lanka.
The President was speaking at the “Critical initiative to revitalise Sri Lanka’s micro, small and medium scale economy” event, organised by the Ceylon Federation of MSME, on Friday at the BMICH in Colombo.
The President said that a copy of the new Bill, which has already been drafted, can be provided to the Ceylon Federation of Micro, Small, and Medium Enterprises. He called upon micro, small, and medium enterprises to submit their views and suggestions on the Bill.
The President said that an opportunity could be afforded to discuss the issues faced by micro, small, and medium enterprises with the International Monetary Fund (IMF) delegation due to visit Sri Lanka at the end of this month. President Wickremesinghe said, “There have been many questions from you, the Micro, Small and Medium-scale Entrepreneurs, about the recent challenges. During the recent past, the country’s economy faced a severe collapse, impacting all businesses, particularly small enterprises and causing widespread losses among micro-enterprises. The banking system was also at risk. Our immediate priority upon taking office was to stabilise the situation, negotiate with the IMF, and work towards economic recovery. “They said that reaching an agreement with the IMF would help us to move forward. Private creditors also agreed to address the framework after we had an agreement with the official creditors. Without financial support, making progress was impossible.
“During that period, we had to agree on several key issues. We decided not to print more money or borrow from banks, as banks themselves were struggling. These practices had become our main sources of income, but we were advised to abandon these flawed approaches and adopt a new strategy.
“As a part of this shift, we had to remove subsidies from some corporations. Previously, we were providing between Rs. 700 and Rs. 800 million in subsidies annually, funded by the people of this country. To correct this, we stopped the subsidies, which led to an increase in prices for goods, including fuel.
“We had to raise the VAT because the revenue from it was insufficient. Currently, the country’s economy is being managed with our own resources. This has placed a significant burden on us, but we had to bear it. The international community observed our efforts to manage our own challenges before seeking external support, and this is where we began our recovery process.
“Ultimately, we successfully managed all public corporations using our own resources. This has led to fuel prices fluctuating in line with global trends. There is potential to further reduce fuel prices by cutting certain costs, and the same applies to energy prices. “Next year, we aim to address all inefficiencies. Once the economy is fully stabilised, we will be able to make further progress. However, it is crucial to protect the local banking system. We had to inject capital into Government banks, such as the Bank of Ceylon and the People’s Bank, as well as private banks. This required using a portion of our funds. Safeguarding the banking system is essential for our continued advancement,” he further added.
