President Gotabaya Rajapaksa
- Detailed discussion at Cabinet meeting over implementation issues
- Cabinet Spokesman acknowledges bottlenecks need to be ironed out
- President to meet with top CB officials next week to discuss way forward
- Complaints continue to flow in from apparel and other sectors on delayed relief
- Govt. insists relief needs to be rolled out while maintaining financial system stability
By Uditha Jayasinghe
President Gotabaya Rajapaksa is to meet with Central Bank officials next week to discuss the implementation of the Rs. 150 billion refinancing facility and find ways to smoothen bottlenecks following numerous complaints from the business community and public.
Cabinet Spokesman Bandula Gunawardana yesterday told reporters that the issue had been discussed in detail during the Cabinet meeting this week and it was decided that President Rajapaksa would preside over a high level meeting including Central Bank Governor Prof. W.D. Lakshman.
“The Government understands that this is a very serious problem. But the Central Bank is an independent institution and as such there is a limit on what the Government can do. The Central Bank has to roll out the refinance facility while maintaining financial system stability but the banks must follow the directives given by the monetary authority as well,” Gunawardana said.
He acknowledged there were numerous complaints of Central Bank circulars being either misunderstood by banks or improperly implemented and as such large numbers of small companies and individuals were not receiving the relief anticipated from the refinance facility.
Responding to questions Gunawardana noted that the Government was paying attention to complaints that leasing payments were being collected even though relief was promised to clients.
“We understand that many people are struggling and the Government will take steps to address these concerns. However, this cannot be tackled in an ad hoc manner. Therefore it was decided that the President will address these issues directly,” he added.
Cabinet last week decided the Rs. 50 billion refinancing facility initially introduced would be expanded by Rs. 100 billion and green lighted a paper presented by Prime Minister Mahinda Rajapaksa in his capacity as Finance Minister.
Banks have already started to lend via the Central Bank refinancing scheme to impacted private sector companies via the loan scheme titled ‘Saubagya COVID-19 Renaissance Facility’. A concessionary interest rate of 4% is applicable and maximum amount to be lent as two months working capital is Rs. 25 million per applicant targeting the SMEs.
However, many key industries, including major export sectors such as apparel this week said they had not received relief via the refinancing facility and remained engaged with ministries and other stakeholders to obtain it. Several sectors have already warned that if they do not receive the funding urgently the support may come too late.
Banks on the other hand have argued they are rolling out the facility as fast as possible but were hampered by unclear directions and logistical issues such as limited staff availability due to COVID-19 mitigation measures.