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Six-month debt relief for tourism, apparel and affected industries
View(s):The Central Bank of Sri Lanka (CBSL) has been called upon to impose a six months debt moratorium for tourism, apparel and industries affected by the coronavirus crisis immediately.
It has also been asked to provide working capital at four percent interest. Ministers have authorised the Cabinet Secretary to give a direction to the CBSL.
The move is part of initiatives taken by Prime Minister Mahinda Rajapaksa in his capacity as Minister of Finance.
These sectors, which employ one of the largest work forces in Sri Lanka, Premier Rajapaksa told his ministerial colleagues, suffered setbacks and they included tourism, exports, overseas employment, information technology (IT), small businesses connected with these sectors.”
The Central Bank has also been requested to reduce Policy Rate below six percent and increase the market liquidity to bring down interest costs to the borrowers. The declining world oil prices have come as a great blessing to the government which has decided that local oil prices should not be reduced. Instead, it will set up a Fuel Price Stabilisation Fund which it believes would net in Rs 200 billion in the next six months.
The seriousness of the financial situation has been spelt out to the ministers by Premier Rajapaksa. He has pointed out that the Contingencies Fund had only Rs 150 million whereas the requirement of the Election Commission was about six billion rupees. In addition to the cash requirement of Rs 1.2 billion to settle bills in hand connected with the November 2019 presidential election.
Since the Vote on Account was authorised by the President, Premier Rajapaksa has pointed out, the Treasury has taken measures to transfer Rs 8.8 billion to Contingencies Fund for the elections. A sum of Rs 500 million has also been released for anti Covid-19 measures. Other commitments include Rs 10 billion to settle pharmaceutical bills and Rs 5 billion to construction contractors with priority being given to those in the small and medium sectors.
Among the other measures the government will embark on:
Impose an import duty on fuel to recover profit margins from petroleum imports.
Authorise the Treasury Secretary to transfer Rs 4 billion to meet food subsidies certified by the Chairman of Lanka Sathosa/CWE and Chairman of the Consumer Affairs Authority.
Authorise the Treasury Secretary to transfer Rs 50 billion from the Fuel Price Stabilisation Fund to settle the debt of the Ceylon Electricity Board. The CEB’s Chairman and Board of Directors to be told to use this to settle the CEB’s loans to the Ceylon Petroleum Corporation.
Encourage solar panel developers to implement an accelerated solar power unit for each household and the Government to subsidise the installation cost of such units in each house.
Premier Rajapaksa has noted that the National Budget and Appropriation Bill 2020 are prepared with fund flows expected to be improved most likely by the end of July this year.