Construction sector gets Treasury letters for unresolved bills to borrow from banks

The Treasury has started to issue letters of confirmation for unresolved bills payable by the government for the service providers, suppliers and contractors in order for them to obtain loan facilities from commercial banks against these unresolved payments. 

Issuing a press release yesterday, the Ministry of Finance, Economy and Policy Development announced that unresolved bills issued in 2019 and 2020 which were reported up to May 31, 2020, are eligible for this programme.   Accordingly, the ministry noted that the Treasury would issue such letters to commercial banks directly nominated by the relevant contractor or service provider or supplier and they are also required to open a special account for this purpose at their nominated banks.

The release stated that the Treasury would gradually release funds to relevant ministries or State entities to settle these arrears.

Further, the ministry noted that this facility is being implemented as per a Cabinet decision made in early June.  According to the State Information Department, the value of unresolved bills payable for the services, supplies and contracts stood at Rs. 240.7 billion in early June.  However, the government had already taken measures to settle arrears worth Rs. 196.6 billion to the construction sector. 

Hence, the new programme is expected to settle remaining arrears worth Rs.44 billion.