Sunday Dec 22, 2024
Sunday Dec 22, 2024
Friday, 15 March 2024 00:40 - - {{hitsCtrl.values.hits}}
The Ceylon Chamber of Commerce yesterday said it was deeply concerned about the decision by the Cabinet of Ministers to temporarily suspend the parate execution law and called for collaborative solutions on the debt recovery framework.
“While we understand that certain businesses essentially in the SME sector need to be supported in the current economic climate, providing that support in the form of curtailing credit recovery measures is not necessarily the best method of supporting these industries,” the Chamber said in a statement. “The Chamber is concerned about the potential impact on the overall financial market as a result of the cancellation of the parate execution law,” it added.
The Chamber acknowledged the concerns raised by the Sri Lanka Banks Association (SLBA) regarding the suspension’s effect on loan recovery. “This, in turn, could lead to higher borrowing costs due to the increase in risk premiums arising from delays in releasing collateral and the reluctance of the banking sector to lend to genuine, non-defaulting businesses due to the perceived challenges of foreclosure related to tangible security. A robust debt recovery framework is essential for maintaining financial stability and facilitating economic activity,” the Chamber said.
The Chamber said it recognises the critical role of Sri Lanka’s MSME/SME sectors, startups, and entrepreneurs. These businesses are driving the economy in terms of job creation, innovation, and diversification. The temporary suspension can provide them with some breathing room for operations. However, it is crucial to find an amicable solution that is supported by data to ensure this temporary relief doesn’t lead to continued defaults.
The absence of strong debt recovery mechanisms could dry finance to the MSME/SME sectors and other financial costs of lending in addition to driving up the cost of funds, the Chamber warned.
“We strongly advocate a consultative process that includes the Government, private sector, legal experts, and technical advisors, supported by relevant data on loan losses and defaults. This collaboration will ensure a fair, balanced, and transparent debt recovery framework tailored to Sri Lanka’s specific needs,” the Ceylon Chamber statement said.
The Ceylon Chamber said it remains committed to working with all stakeholders towards creating a more inclusive and sustainable approach to financial recovery and business growth. “We believe that collaborative efforts and constructive dialogue are essential for achieving balanced solutions that serve the national interest in the long run,” it added.
