Subsidised loan scheme: Rs. 95 b allocated for MSMEs

Sri Lanka’s Micro, Small and Medium Enterprises (MSMEs) are to be allocated Rs. 95 billion in 2026 for subsidised loans by the government, in order to incentivize more businesses, aid expansion, and support technology investments, Ministry of Finance, Planning and Economic Development Department of Development Finance Director General Manjula Hettiarachchi told media yesterday (12).

“This year we expect to provide a loan facility package with subsidised interest rates to SMEs. The total allocated sum is to be Rs. 95 billion, for the purpose of enabling SMEs to start their businesses, expand and introduce needed technology to their businesses,” Hettiarachchi said, noting the contribution of the segment towards the economy. 

“In 2026, as a Government, we have many targets that we are aiming for, especially the export earnings target of $ 36 billion. If we look at the contribution of Small and Medium Enterprises to the Gross Domestic Product (GDP), they are crucial.”

In December, Sri Lanka began identifying and compensating MSMEs that had been impacted by cyclone Ditwah, which had borne physical damage to production plants, machinery and temporarily halted MSME operations islandwide.   

“As a country, we had to face the Ditwah cyclone in the last month of last year, which affected the SME segment considerably. The SMEs needed to restart their businesses, for which swiftly a subsidized interest loan scheme was introduced.”

The Government had provided a loan subsidy of Rs. 200,000, at an interest rate of 3%, with micro-entrepreneurs eligible for up to Rs. 250,000, small-medium-scale entrepreneurs offered up to Rs. 1 million, while medium/large-scale entrepreneurs offered up to Rs. 25 million.

The Ministry of Industry and Entrepreneurship Development noted that of the 29,649 businesses that had registered themselves on the national database for compensation; 5,639 businesses were micro enterprises, 4,636 were small businesses, and 2,986 were medium-scale firms.

“The Government allocated Rs. 10 billion for this. We started facilitating this with the state banks from the last week of December,” Hettiarachchi said.

Notably, Hettiarachchi added that the Ministry of Finance, in discussions with the private banking sector, is looking to enable compensation for MSMEs up to Rs. 25 million.

“We are in discussions with private banks, especially under this loan program, which we have offered a 3% interest rate for, to take it upwards to Rs. 25 million, for all SMEs that had been impacted by this cyclone, for their working capital needs,” he said.

According to Committee on Public Finance Chairman (COPF) Harsha de Silva, the MSME segment’s total debt burden by now has exceeded Rs. 1 trillion.

Source - The Morning