Panel discussion in progress. From left: Ceylon Chamber Chairman and Cargills Bank Director/CEO Rajendra Theagarajah, Senior Central Bank Deputy Governor Dr.Nandalal Weerasinghe, Melstacorp Chairman Harry Jayawardena, KPMG Sri Lanka Managing Partner Reyaz Mihular, Verite Research Executive Director Dr.Nishan De Mel, Advisor to Finance Minister Deshal de Mel
Pic by Nimalsiri Edirisinghe
- Govt. yet to reimburse payments due from senior citizen interest scheme for almost 10 quarters
- Senior banker fears similar outcome from much touted ‘Enterprise Sri Lanka’ loan scheme
- Finance Ministry assures interest payment to banks as specific allocations made in Budget 2019
By Indika Sakalasooriya
Doubts were cast during a budget forum yesterday on the government’s ability to honour interest payments stemming from its much touted ‘Enterprise Sri Lanka’ subsidy loan scheme to the country’s banking sector, as banks are yet to be reimbursed of the payments due from the previously introduced senior citizen interest scheme for almost 10 quarters.
While commending the government for designing programmes to stimulate entrepreneurship at the grassroots level, Ceylon Chamber of Commerce Chairman and Director/CEO of Cargills Bank Rajendra Theagarajah said the Finance Ministry will have to do a lot of work to convince the average person that these schemes are going to work.
“Most of these schemes come under what you call interest refinancing model. While the Central Bank administers these schemes through the participation of the banks, the reimbursement is done by the Finance Ministry.
“Frankly, I’m, at this point in time, very skeptical because we already have a burning issue with the senior citizen interest scheme.
“I believe that almost payments of the 10 quarters haven’t been reimbursed,” Theagarajah told during a panel discussion of a budget forum organized by KPMG in Colombo.
In 2015, the government introduced a 15 percent subsidized interest scheme for fixed deposits up to Rs.1 million maintained by citizens over t
he age of 60.
The government is expected to pay the difference between the 15 percent and the market standard interest rate offered by commercial banks.
The Rs.1 million threshold was increased to Rs.1.5 million in 2017.
Meanwhile, Theagarajah further said the government may need to look at paying the funds owed to existing entrepreneurs before looking at creating new entrepreneurship to expand the economic activities in the country.
“Already a sum of Rs.200-300 billion is due to the local entrepreneurship, specially in the construction industry. If 20 or 30 percent of that is repaid for the work done, that itself will cascade and stimulate liquidity into the system without having to look for new entrepreneurship,” he stressed.
Finance Minister Mangala Samaraweera delivering the budget speech on Tuesday said that over 30, 000 entrepreneurs have already benefitted from the ‘Enterprise Sri Lanka’ loan scheme with almost Rs.60 billion worth of loans being disbursed.
While acknowledging the existence of a “large outstanding” problem with regard to senior citizen interest scheme, Advisor to the Finance Minister, Deshal de Mel, who was also panelist at the budget KPMG budget discussion, was quick to point out that ‘Enterprise Sri Lanka’ has a specific budget allocation.
“Senior citizen subsidy—we are well aware it has been problematic. There is a large outstanding level for which a solution needs to be found.
“But for Enterprise Sri Lanka loans, there has always been a specific allocation and even in this budget there is a specific allocation that has been made. So, we don’t foresee any problems with regard to settling of those dues,” de Mel said.