Tough times ahead for SMEs with DDO: SLUNBA

The impact of the recently approved Domestic Debt Optimisation (DDO) effort would be “deadly” on the small and medium enterprise (SME) sector, the Sri Lanka United National Businesses Alliance (SLUNBA) said, cautioning tough times are likely ahead for businesses.

SLUNBA Chairperson Tania Abeysundara said the outcome (of the DDO) would be detrimental and that trying to control inflation would put the country into recession.

Speaking on behalf of the association, she shared that most of the SMEs cannot afford to support their liabilities with the income they generate, due to market suppression. Therefore, the government needs to understand for the banking sector to be protected, the SME companies should be protected.

“The government has no heart and soul. They need to understand the policies made by any government have to be fair to all citizens. They cannot have diversified policies to suit only them statistically,” said Abeysundara, commenting on the DDO exercise. 

She noted that in the long run, the DDO is good but the government has “forgotten” the decisions taken by the Central Bank over the last year, which severely impacted the SME sector.

She pointed out that several SME companies are shutting down and this would lead to the deterioration of the country’s economic strength. The SME sector contributes to about 52 percent of Sri Lanka’s GDP.

“The government themselves are going for the DDO; they need to realise the gravity that they would have to face, if the policies are not revived in restructuring the loans of the SMEs,” said Abeysundara, while pointing out that the government can’t say they have brought about policies to help the SMEs.

“The Central Bank needs to understand to evaluate the situation in a method where the country’s economy will not fall but the policies made by them only would benefit the big companies and government beneficiaries,” she said.