New Credit Schemes to revive economy | Daily News


 

Central Bank announces:

New Credit Schemes to revive economy

Rs.150 billion for affected businesses:
Dedicated lending facilities for construction sector:

The Central Bank of Sri Lanka yesterday announced that it would introduce all-new credit schemes aimed at reviving the economy adversely affected by the Coronavirus pandemic.

“Growth of the Sri Lankan economy has fallen to dismal levels over the past few years, and the impact of the COVID-19 pandemic may result in severe stress on economic and financial system stability in the period ahead unless immediate remedial actions are taken. In this context, in support of the Government’s efforts to revive the economy, the Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 16 June 2020, decided to introduce new credit schemes under the Section 83 of the Monetary Law Act No. 58 of 1949,” the CBSL stated in a news release issued yesterday.

Accordingly, in addition to the already disbursed Rs. 27.5 billion under the refinance scheme introduced on 27 March 2020, the Central Bank will provide funding to Licensed Commercial Banks (LCBs) at the concessionary rate of 1.00 per cent against the pledge of a broad spectrum of collateral, on the condition that LCBs in turn will on-lend to domestic businesses at 4.00 per cent, while ensuring the greatest possible distribution of this facility. This scheme along with the existing refinance Scheme will provide Rs. 150 billion in total to the businesses affected by the COVID-19 pandemic.

In addition, construction sector enterprises will be provided with a facility to borrow from LCBs, using guarantees issued by the Government equivalent to the amount due on account of contracts carried out in the past, under a new dedicated credit scheme funded by the Central Bank and made available at the aforementioned concessionary rates.

Operating instructions on these new credit schemes will be issued via the media within the next few days, the Bank said.

These measures also follow a meeting of President Gotabaya Rajapaksa and Central Bank officials and economists on Tuesday, where the President urged them to come up with urgent solutions to rejuvenate the overall economy and afford relief to various segments that have been adversely affected by the pandemic. He said they have a responsibility to forward plans and solutions to bring the country out of the present predicament caused by the global virus outbreak. Otherwise the gains made by the Government in controlling the contagion to this extent would be in vain, he pointed out.


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