SME sector seeks a temporary suspension of parate executions and it has now reached the ears of the Government.

As the business community awaits a response, there is anticipation for proactive measures to be taken. A collaborative approach between policymakers, financial institutions, and SME representatives could pave the way for a strategic resolution. The government’s role in facilitating economic recovery becomes crucial, and a thoughtful response may involve a reassessment of existing laws and financial restructuring to align with the current economic challenges.

Unlocking Growth: SMEs Call for Suspension of Parate Executions Until 4.5% Economic Growth Achieved

Economic Struggles Trigger Plea for Parate Execution Pause

Small and Medium-scale Enterprises (SMEs) are facing a severe economic downturn, with businesses collapsing and banks executing over 1,200 parate actions. The distress has compelled SMEs to pass a resolution advocating for the temporary suspension of parate executions until Sri Lanka achieves a growth rate of 4.5%. The plea is rooted in the aftermath of the Easter Sunday terror attacks and the lingering impacts of the COVID-19 pandemic, which have dealt significant blows to the nation’s economic landscape.

SMEs Seek Reprieve Amid Economic Crisis

Addressing the Anti-parate Activists Business Forum at the Bandaranaike Memorial International Conference Hall (BMICH), Susantha Liyanaarachchi, Chairman of the National Construction Association of Sri Lanka (NCASL), shed light on the dire situation. The economic crisis, compounded by Sri Lanka’s declaration of bankruptcy, has left businesses without support from the banking sector. Banks, tightening their reins, have refrained from providing relief to struggling businesses, refusing even temporary overdrafts.

SMEs Contribute Significantly to GDP

Liyanaarachchi emphasized the critical role SMEs play in Sri Lanka’s economy, contributing around 51% to the Gross Domestic Product (GDP). However, post-COVID-19, these enterprises, which had previously used their own funds to safeguard their staff, now find themselves in distress. Construction businesses, in particular, have witnessed closures, leaving not only business owners but also employees unemployed.

Parate Law Exacerbates Economic Woes

As businesses grapple with debt repayments amid economic hardships, the parate law adds another layer of distress. Both State and Private Banks have carried out more than 1200 parate executions, intensifying the challenges faced by SMEs. Liyanaarachchi, foreseeing additional hurdles due to rising taxes in the coming year, urged the Minister to consider a temporary suspension of parate executions until the economic growth rate reaches 4.5%.

SMEs seek Abolition of Parate Law

In a collective effort, Small and Medium-scale business owners participating in the discussion passed a resolution advocating for the abolition of the parate law. They urged the temporary suspension of the Recovery of Loans by Banks (Special Provisions) Act, No. 4 of 1990 until the country attains an economic growth rate of 4.5%, reminiscent of the pre-2019 crises. Approximately 1400 small and medium-scale entrepreneurs are currently grappling with the repercussions of the parate law, adding urgency to the plea for a reprieve.

SMEs seek collaborative efforts for Economic Revitalization

Recognizing the severity of the situation, stakeholders are contemplating collaborative efforts to revitalize the SME sector. Forums and dialogues, involving government officials, banking representatives, and business leaders, could serve as platforms for constructive discussions. These interactions may lead to the formulation of targeted policies and support mechanisms aimed at rejuvenating SMEs. By fostering an environment conducive to business growth, stakeholders can collectively work towards achieving a sustainable economic rebound.

The Imperative of Economic Stability

Amidst the calls for policy reforms and temporary suspensions, the overarching goal remains the restoration of economic stability. SMEs, being the backbone of the economy, require a conducive environment to thrive. Beyond immediate measures, a long-term vision that addresses the resilience of businesses in the face of unforeseen challenges is essential. This entails not only mitigating the current crisis but also implementing measures that fortify the SME sector against future economic uncertainties. As the nation grapples with these pressing issues, a collaborative commitment to fostering economic stability becomes imperative for sustained growth and prosperity.

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