Sri Lanka is currently fighting a Global Pandemic and enduring a challenging period both in terms of Healthcare and an Economic upheaval. This has resulted in halt of Production, many businesses reaching a critical juncture.
Further, some of the exporters are facing issues with cancelled pre orders on already manufactured batches of products in terms of the economic slowdown around the world. This trying situation presumably will lead to high levels of retrenchment such as employee redundancy and to the extreme extent of complete shutdown of business ventures.
In this light the NCE proposes that President to explore the option of opening up EPF funds as a loan provider, to the employees in the form of salaries for several months, until the Exporting businesses could stand on their own. The suggestions are of dual form, from which the most feasible and suitable could be followed.
The NCE suggest that EPF funds are released to the employees (staff) as a loan covering their monthly salaries for the months March to August 2020. This mechanism to be strengthen with commercial banks acting as the administrator. The employer (exporter) submit the payroll to the bank who in turn obtain the funds from EPF and credit the salaries to the employee’s (staff) accounts. Prior to doing so, the bank will ensure necessary credit checks/guarantees are obtaining from the employer (exporter). The employer (exporter) will act the guarantor to the loan given by EPF to the employee (staff) and be liable for repayment of same.
As an alternative model suggested, is the commercial banks to grant a credit facility exclusively to employers (exporters) to pay their employee (staff) salaries covering the period March to August 2020.The employer (exporter) submit the payroll to the bank, whom in turn will credit the employee (staff) accounts with relevant payments.
It is suggested that re-payment of loan to be completed within 24 months of granting with an interest component of 6% for EPF and 0.50% margin for the bank totaling 6.50% p.a.
Further the NCE also requests the Central bank to direct the commercial banks, who have been top performers during the past few years to provide loans to the exporters at a concessionary interest rates, in the situation the EPF cannot be utilized as a means of providing loans, and for their working capital management requirements.
“Our proposal is to protect industries; especially the exporting companies, with the potential to create inflows of foreign exchange in this critical need.it is assured that our exporters will repay the government once they are strong in their operations.
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