Opposition Leader Sajith Premadasa has urged the government to implement sustainable solutions for micro, small, and medium-scale industrialists and entrepreneurs, who he says are currently confused and distressed.

Warning that from midnight today (30 June), the Parate Law will once again be enforced in Sri Lanka, allowing the rapid auctioning of properties belonging to industrialists and entrepreneurs, MP Premadasa said that, as a result, many micro, small, and medium-scale business owners are now facing the imminent loss of their assets.

Highlighting the importance of this sector, MP Premadasa emphasized that micro, small, and medium-scale enterprises contribute more than 50% to the country’s Gross Domestic Product (GDP) and provide employment to over 4 million people. He cautioned that the reimplementation of the Parate Law will significantly impact this contribution and lead to a decline in overall economic growth.

Speaking at a special media briefing today, the Opposition Leader criticized both the current and former governments, accusing them of deceiving the MSME sector by suspending the Parate Law temporarily for electoral gains but ultimately failing to deliver lasting solutions.

He stated that the auctioning of MSME properties will not only reduce GDP but also lead to increased unemployment and a drop in exports, contradicting the government’s stated goal of export promotion.

Premadasa further explained that MSMEs had called for the temporary suspension of the Parate Law and the restructuring of their debts, including the waiving of interest and bad debts. He reminded the government that these businesses have been severely affected by the Easter Sunday attacks, the COVID-19 pandemic, and the country’s economic crisis, and therefore deserve strong, compassionate support.

MP Premadasa criticized the government’s inaction, stating that a government with a two-thirds majority in Parliament and executive power through the presidency cannot simply ignore these problems. “MSMEs are looking to the government for immediate and meaningful solutions,” he said.

Calling for an end to lies and deception, MP Premadasa demanded the immediate suspension of the Parate Law for a defined period, the restructuring of debts, and the waiving of interest and bad loans. He urged the government to offer tangible relief to help these businesses recover and to put an end to the era of empty promises and confusion. (Newswire)

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The grace period granted to businesses with loans exceeding Rs. 50 million under Sri Lanka’s Parate Execution Law officially expires at midnight today.

The Central Bank of Sri Lanka announced that the relevant relief will only be available to small and medium-sized businesses that initiated discussions with banks before 31st March this year.

Meanwhile, SMEs with outstanding loans between Rs. 25 million and Rs. 50 million will continue to benefit from the grace period until 30 September 2025. 

The Parate Execution Law allows banks to seize assets of defaulting borrowers without court intervention. (Newswire)

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The National Construction Association of Sri Lanka (NCASL) has called on the President to extend the suspension of the Parate Law and provide relief to the business sector. 

Addressing the media, Chairman of the NCASL, Susantha Liyanaarachchi, said that the Parate Law comes into effect at midnight on 30th June. 

He further said that, as such, the power to seize property will be back in the hands of banks. 

“The business category consists of over 50 million people. When banks are approached regarding the Parate Law and properties, they do not help or grant any relief. The Central Bank also sends circulars stating that the banks have the authority to make decisions,” he said. 

Stating that, at present, such circulars are not effective, Susantha Liyanaarachchi said that, currently, a proper directive is needed from the Central Bank Governor in this regard.

Accordingly, Susantha Liyanaarachchi urged the President to intervene and provide relief to the business sector. (Newswire)

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Sri Lanka’s Ministry of Finance has announced a further extension of the suspension for the execution of the Parate law for Small and Medium Enterprises (SMEs).

Issuing a statement, the Finance Ministry said the execution of Parate law, initially suspended until 31 March, has been extended till 31 December 2025.

According to the Finance Ministry, the extension is applicable for SMEs with borrowings below Rs. 25 million.

The extension until 30 September 2025 is applicable for SMEs with borrowings of Rs. 25-50 million. 

The Finance Ministry further said the extension until 30 June 2025 is applicable for those exceeding Rs. 50 million.  

These benefits are available exclusively for SMEs that initiated discussions with their relevant banks before the 31 March 2025, cut-off date, the ministry added. 

Opposition Leader Sajith raised concerns over the Parate law in Parliament yesterday, stating that despite it being temporarily suspended to provide relief to SMEs, the law was now being implemented again.

He further questioned whether the government intends to further extend the suspension of the execution of the Parate law. (Newswire)

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The Cabinet of Ministers has approved the extension of the suspension of the Parate Law, which halts banks from acquiring creditors’ properties.

Cabinet Spokesman Minister Nalinda Jayatissa announced that the suspension of the Parate Law has been extended until 31 March 2025.

In May this year, the Committee on Public Finance (COPF), under the Ranil Wickremesinghe Government, conditionally approved the suspension of Sri Lanka’s Parate Execution Law until December 15, 2024. 

At the time, the COPF approved subject to conditions, the Recovery of Loans by Banks (Special Provisions) (Amendment) Bill to be amended to facilitate legal provisions for the suspension of the Parate Law. (Newswire)

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The government has engaged in a special discussion to consider potential steps that could be taken to further support struggling Small and Medium Enterprises (SMEs) before the expiration of the Parate law used for debt recovery.

According to the President’s Media Division (PMD), a special meeting was held at the Presidential Secretariat today (11 Nov) to address relief measures for SMEs facing financial challenges. 

The meeting was led by the Senior Additional Secretary to the President for Finance and Economic Affairs, G. N. R. D. Aponsu, and included officials from the Ministry of Finance, the Central Bank of Sri Lanka, and Sri Lanka Banks’ Association (Guarantee) Limited. 

The discussions focused on the financial difficulties encountered by SMEs due to loan obligations. 

Currently, debt recovery processes under the Parate law have been temporarily suspended for SMEs, with this suspension set to expire on December 15. The meeting considered potential steps that could be taken before the expiration date to further support struggling SMEs.

The meeting also examined ways for the banking sector to provide additional support to SMEs and boost productivity in the economy. 

During the discussions, it was decided to compile a comprehensive report on the loans taken by SMEs from banks. This report will serve as a basis for designing future relief measures.

Additionally, the Central Bank of Sri Lanka and various commercial banks have also commenced evaluating the steps needed for the temporary suspension of debt recovery under the Parate law for SME loans. (Newswire)

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The Committee on Public Finance (CoPF) has conditionally approved to suspend Sri Lanka’s parate execution law until December 15, 2024. 

Accordingly, the CoPF approved subject to conditions, the Recovery of Loans by Banks (Special Provisions) (Amendment) Bill which was amended to facilitate legal provisions for the suspension of parate law until December 15 2024. 

With the approval, the banks’ practice of acquiring properties of whose loans are yet to be paid off will be suspended until December 15 and the Recovery of Loans by Banks (Special Provisions) Act No. 4 of 1990 will be amended to facilitate the necessary legal provisions.

The approval was granted when the Committee on Public Finance met in Parliament recently (April 30) under the chairmanship of Member of Parliament Harsha De Silva.

While officials representing the Ministry of Finance said that they hope to provide temporary relief to the creditors, they failed to answer the committee’s questions on actions to be taken after December 15. 

The committee recommended that all the parties who have done business with the banks subject to parate law should be given a fair opportunity to negotiate with the banks.

The committee also questioned the officials about the distribution of loans under the parate law. When inquired about the manner in which the micro, small scale and medium-scale enterprises, in particular, have received loans under this law and the criteria under which they are classified, the officials said that they did not have the correct data to answer the question. 

The committee also inquired into the percentage of the sectors that were most affected. Furthermore, the committee asked the officials to provide data on the implementation of the Parate Law in other periods compared to the specific period in which there was an economic recession due to the impact of the coronavirus in 2020, 2021 and 2022. The officials present mentioned that the data on this matter will be presented to the committee in the future.

Meanwhile, the committee has also given its approval for the orders under the Foreign Exchange Act No. 12 of 2017 and the regulations under the Sri Lanka Securities and Exchange Commission Act No. 19 of 2021. Also, the committee approved the regulations under the Import and Export (Control) Act No. 1 of 1969.

State Minister Suren Raghavan, MPs Premnath C. Dolawatta and Madhura Withanage participated in this meeting.

Officials representing several government institutions including the Ministry of Finance, Economic Stabilization and National Policy, the Auditor General’s Department, the Central Bank of Sri Lanka, and Sri Lanka Customs were also present in the meeting. (Newswire)

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Minister of Justice Wijeyadasa Rajapakshe has disclosed plans to introduce an amendment concerning the temporary suspension of Parate execution, indicating its imminent presentation to Parliament. 

He pointed out that this proposed legislative change signifies a proactive approach towards addressing legal matters crucial for the country’s governance and justice system.

Minister Rajapakshe also highlighted the anticipation of implementing a distinct loan scheme tailored specifically for Small and Midsize Enterprises (SMEs). 

He revealed that this initiative aims to bolster the economic prospects of smaller businesses, contributing to overall economic resilience and growth.

“The staggering amount of loans extended by two state banks, totalling approximately Rs. 602 billion, presents a daunting challenge. Much of this sum is destined to be written off as bad debt due to non-payment. Had these funds been allocated towards agriculture and industry, significant strides in growth could have been achieved. This predicament underscores the necessity for stringent financial controls within the country to ensure optimal utilization of resources and sustainable economic development. 

“To prevent crises for businesses and financial institutions, proactive measures are essential. Therefore, steps must be taken to alleviate the challenges associated with Parate execution. Plans are underway to propose amendments to Parliament regarding Parate execution to address these concerns,” the Justice Minister said. 

He added that a separate loan scheme tailored for Small and Midsize Enterprises (SMEs) is on the agenda, with President Ranil Wickremesinghe lending his support to this initiative.

The minister further emphasizes the government’s steadfast dedication to advancing legal reforms and providing support to SMEs, thus affirming its commitment to national progress and prosperity.

Minister Wijeyadasa Rajapakshe made these announcements during a press briefing held at the Presidential Media Centre on Tuesday (Feb 27).

The full statement of Justice Minister Wijeyadasa Rajapakshe;

A nation’s fiscal policy is integral to its economic strength. The central bank holds significant authority in shaping this policy landscape. Reflecting on discussions surrounding Parate execution in Sri Lanka, it becomes apparent that the central bank’s focus is primarily centred on safeguarding the stability of financial institutions. However, concerns have been raised regarding whether sufficient attention has been paid to the country’s overall balance sheet, especially amidst declines in the agricultural sector from 22% to 8% and the industrial sector from 38% to 32%.

Despite borrowing from the International Monetary Fund (IMF) on 17 occasions, the economy has struggled to regain its footing. A notable trend has been the continuous expansion of the service sector at the expense of neglecting the industrial sector, resulting in decreased production capacity. This imbalance has impeded the nation’s economic recovery and overall growth trajectory.

The staggering amount of loans extended by two state banks, totalling approximately Rs. 602 billion, presents a daunting challenge. Much of this sum is destined to be written off as bad debt due to non-payment. Had these funds been allocated towards agriculture and industry, significant strides in growth could have been achieved. This predicament underscores the necessity for stringent financial controls within the country to ensure optimal utilization of resources and sustainable economic development.

To prevent crises for businesses and financial institutions, proactive measures are essential. Therefore, steps must be taken to alleviate the challenges associated with Parate execution. Plans are underway to propose amendments to Parliament regarding Parate execution to address these concerns. 

Additionally, a separate loan scheme tailored for Small and Midsize Enterprises (SMEs) is on the agenda, with President Ranil Wickremesinghe lending his support to this initiative.

Furthermore, the government aims to implement a low-interest loan program for SMEs, collaborating with key financial institutions like the World Bank and the Asian Development Bank. Recognizing the importance of responsible lending, discussions with the Cabinet have led to the decision to establish a monitoring system for credit facilities. Future deliberations with the Ministry of Finance are also anticipated to refine these strategies further. (NewsWire)

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