The Enterprise Sri Lanka credit schemes introduced in the Budget has subsidized loans at 6.5% – 8% to encourage the SME sector, State Finance Minister Eran Wickramaratne said.
He was addressing the National Chamber of Exporters (NCE) Post-Budget Forum 2018, last Wednesday.
Highlighting the measures taken through the 2018 Budget to support small and medium scale entrepreneurs, he said, “We have introduced numerous measures such as low interest loan schemes for SMEs without collateral, which is not an easy task.”
Although the SME sector is the backbone of country’s economy, he said constraints in accessing affordable capital were an issue that had hindered development of SMEs. The State Minister said that banks were reluctant to facilitate loans to SMEs without collateral, and it was not easy to figure out how to overcome it.
Wickramaratne however said bankers should look at more advanced techniques to expand credit sans collateral especially to expand credit for the export-oriented SME sector.
He said Sri Lanka’s trade had scaled down to alarming levels with state protectionist measures in place. Exports have plummeted to a low level from around 33% of GDP in 2000 to around 12% in 2016.
“There are countries that have 100%, 150%, 175% of exports to the GDP and we are thinking that 33% is a big achievement. But even just to get there by doubling our exports, which is a challenge, we have to break the current structure of our exports,” he said.
In the first phase with 2018 Budget 1,200 lines of para-tariffs will be abolished immediately and they would do away with 7,000 lines of tariffs in the next three years.
An apex bank to provide long term loans was also under consideration, Wickramaratne said.