Mangala tackles debt-traps in war-affected North | Sunday Observer

Mangala tackles debt-traps in war-affected North

Minister Mangala Samaraweera met women’s groups at the Puthukudiyirippu Divisional Secretariat yesterday
Minister Mangala Samaraweera met women’s groups at the Puthukudiyirippu Divisional Secretariat yesterday

Finance Minister and top officials on three-day visit to Jaffna, Kilinochchi and Mullaitivu focused on livelihoods, rebuilding and economic wellbeing

JAFFNA: Kicking off a three day official visit to the North, Finance Minister Mangala Samaraweera on Friday (30) declared a six month moratorium on loans of Rs. 50,000 or less obtained by Northern Province residents from all licensed financial institutions and announced several initiatives to support livelihoods and overcome indebtedness in the war-ravaged region.

In what many described as the first visit by a high level Sri Lankan Minister intensely focused on the economic wellbeing of the Northern community, the Minister, accompanied by the Central Bank Governor Dr Indrajit Coomaraswamy, said the purpose of the six month moratorium on small loans was aimed at bringing residents of the formerly embattled Northern Province some relief until other income streams could be generated to service debt.

In Jaffna on Friday, Dr. Coomaraswamy urged the close cooperation of Regional Bank Managers and heads of Finance Companies in implementing the six month moratorium. According to the Governor, while the Chief Executive Officers of Banks and Non-Bank Financial Institutions have agreed to grant a moratorium beginning March 1, 2018, the implementation of the policy has not gained much traction because of the limited cooperation the initiative has garnered on the ground.

“The rationale behind the moratorium is particularly for people who have taken small consumption loans up to Rs. 50,000 and it is only for six months to make sure it does not hit the Balance Sheets of Banks and NBFIs. We are keen in implementing this moratorium and we want to get the message out through our regional offices,” he said.

The Governor explained that the idea of providing this relief is to ensure that some of the other government schemes such as, the Enterprise Sri Lanka loan schemes can kick in during the six month period which will then allow the people to have a more sustainable outcome in terms of their capacity to service debt.

“We need your cooperation to give these people relief so that the other credit programs can create income streams to service debt,” he emphasized.

New Inland Revenue Act to boost Northern investments - Mangala

Finance Minister Mangala Samaraweera, who is on a three day visit to the war-ravaged Northern Province said the Government’s new Inland Revenue Act which comes into effect today, will especially benefit those seeking to invest in the North.

“In rebuilding the North, we are not only thinking of foreign investors but certainly the Diaspora as well,” he said at a meeting attended by representatives from the Jaffna Chamber and the regional business community, the Finance Minister said.

“We would like to implement the several important proposals in my first Budget unveiled in November last year titled Enterprise Sri Lanka, as early as possible with the help of people like you in the private sector,” he added.

According to the Treasury Secretary, Dr. R H S Samarathunga, under the New Inland Revenue Act which comes into effect today (1), tax concessions offered for potential investors to the Northern region will be almost doubled.

“The concessions offered to the North are by far the best investment support regime in South Asia,” the Treasury Secretary pointed out.

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Thousands of residents rallied in Jaffna on February 27 protesting against Government inaction in the face of mounting household debt in the war-affected region. War-affected women are the worst affected by high-interest, unregulated loans dished out by a host of micro-finance companies operating in the North and East, where the people are still struggling to rebuild after three decades of war, making them vulnerable to exploitative credit schemes. In some cases, while the interest rates on paper were about 28 percent, the actual interest adds up to 70 percent, Jaffna community leaders claim.

On Friday, Minister Samaraweera also met with the Cooperative Council and 50 producer cooperative industries and discussed the several debt relief measures with co-operatives and women’s groups in Jaffna. During the meeting, the Minister, while reassuring his firm support appraised the large community of close to 36,000 members of which almost 90% were women of the several debt relief measures being undertaken by the government.

In the 2018 budget proposals Minister Samaraweera pledged to allocate Rs.1 billion support by way of provision of grants and the introduction of a low interest loan scheme to alleviate people in a debt trap through Co-operative Rural Banks and the Thrift and Credit Co-operative Societies. This will be implemented on a pilot basis in the North and the North Central Provinces, the Minister announced.

Pointing out that Budget 2018 had over 60 proposals, especially, targeting the development of both the North and the Eastern Provinces, he said the government’s ‘Enterprise Sri Lanka’ program consisting of loan schemes subsidized by the government benefiting different groups of people, including ex-combatants and women, will be formally launched by May 2018.

Also, accompanying Minister Samaraweera was Secretary to the Treasury, Dr. R H S Samarathunga, Deputy Secretary to the Treasury, A.R. Deshapriya and Director General, Department of Development Finance of the Ministry of Finance, A.M.P.M.B. Athapattu.

Pix: Rukmal Gamage

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