Rs. 15 bn for loans at lower interest rate to target small businesses – Mangala

Budget-2018 would create a credit scheme with the allocation of Rs. 15 billion to enable small businesses to obtain loans at an interest of 6.5% and in some cases 3.3% to fund modernisation and expansion of enterprises, said Minister of Finance and Mass Media Mangala Samara.

The Minister, addressing a post budget forum in Colombo, said that at present one of the biggest barriers to starting a business was the cost of capital. Many young entrepreneurs and SMEs had innovative business ideas but found it difficult to implement at the prevailing interest rates of 15% and above.

Samaraweera said that in parallel, a SME guarantee fund was also being set up to enable SMEs with sound business plans to access credit without collateral. A Development Bank with an Exim window would provide development capital in the form of long term loans, project lending, and start up financing.

“These new initiatives will change the entire landscape of Sri Lankan enterprise,” said the Finance Minister

Referring to various suggestions made by different sectors of the economy on the budget, the Finance Minister said that he was willing to listen to suggestions where there might be mistakes to correct. But, the main theme of the budget- enterprise Sri Lanka and liberalisations were non-negotiable, he added.

The minister emphasised that citizens, especially the youth of the country would be empowered so that they would be responsible for their future. “Starting with this budget, we want to remove the barriers to investment, trade, and enterprise. Lack of access to land, labour, and affordable capital are the major impediments to the creation of new businesses and to expand existing ones.”

The Finance Minister said that a series of legislative changes would be implemented to address the difficulties in accessing those factors of production. Archaic laws such as the Agricultural Lands Act and the Shop and Office Employees Act would be revised to provide more flexibility to the market, he said.

The Finance and Mass Media Minister said that today only 10% of around 300,000 Advanced Level students find a place in the state universities annually. “For too long we have devoted all our energies only to this 10%. In this Budget, we have focused on harnessing the talents of those who are left behind and are now creating opportunities for them.”

“The 13 years of education policy recognises the varied skill of students and ensures the opportunity for students to stay on in school after Ordinary Levels. Students can take up market-oriented skill development programmes including digital skills, creative skills, and technical skills.

“We are working with the German and Swiss governments to expand the German Technical schools with five new schools around Sri Lanka. The skill development programmes will be conducted in close collaboration with the private sector to ensure relevance.”

Minister Samaraweera, in conclusion, said all efforts through his maiden budget would together position Sri Lanka on a high, sustainable, and inclusive growth path. He called upon the business community and all other stakeholders to extend their support to ensure that the budget worked for all the people of Sri Lanka.