The President

¶ 01 It was scheduled to lapse. However, upon review, we found that small and medium-scale entrepreneurs have not yet fully recovered to their pre-crisis condition. Therefore, they should be given additional time. Our study revealed that as at 2024.09.30, total non-performing loans (NPLs) amounted to Rs. 1,385 billion with 752,896 borrowers. Notably, 99% of these borrowers had NPL amounts below Rs. 25 million. Thus, while there are 752,896 borrowers, 99% of them have NPLs below Rs. 25 million.

¶ 02 Accordingly, we prepared a plan. Since the complete freezing under the current moratorium could trigger a financial crisis in the banking system—because banks hold the public’s deposits and do not create money in a COD-like manner—we must also assure protection of public deposits. We have seen in the past that when many financial institutions collapsed, accountability did not fall on directors or bankers, and depositors suffered the consequences. Large institutional failures caused severe hardship to depositors; some even took their lives. Even today, depositors of institutions like ETI continue to suffer. Therefore, in our decisions we must balance protection of the banking system with protection of small and medium-scale entrepreneurs.

¶ 03 We have decided to extend the moratorium that was to lapse on December 15 this year for approximately three and a half months until March 31, 2025. We also devised a phased plan: - For loans below Rs. 25 million (excluding accrued interest), time will be allowed until December 15, 2025 to complete restructuring. By March 31, 2025, borrowers must present to their banks whether they are prepared to join a restructuring plan. Discussions between banks and borrowers to formulate a restructuring plan for their dues can continue until December 31. - For loans between Rs. 25–50 million (excluding accrued interest), borrowers must indicate consent to restructuring before March 31, 2025. We allow nine months, up to September 15, 2025, for banks and borrowers to negotiate and finalize a restructuring plan. - For loans above Rs. 50 million (excluding accrued interest)—which represent less than 1% of borrowers—we allow until June 15, 2025 to complete restructuring, provided they indicate consent before March 31, 2025.

¶ 04 This plan is designed to protect both SMEs and the stability of the banking system. We have now reached agreement in principle.

¶ 05 Next, we all know that in this economic crisis many at the lower rungs of our economy were neglected and are suffering. We intend to provide them relief through the forthcoming Budget. However, before that, certain enactments must be passed by Parliament. If we are to implement some proposals by April, we need to pass the necessary laws beforehand. We have already placed some matters before Parliament; I will reiterate a few. Some require legislation; others are already being implemented.

¶ 06 For example, we increased the allowance to pensioners by Rs. 3,000 from October, recognizing their hardship despite fiscal constraints.

¶ 07 We also increased the fertilizer subsidy for farmers up to Rs. 25,000. We have received reports of delays in disbursement in some areas. After discussion with the Ministry of Finance, we are arranging for prompt, delay-free payment of this fertilizer support.

¶ 08 We have provided a fuel subsidy to fishers. Regarding schoolchildren, studies show the collapse of the economy most severely affected our children—extra classes were halted, purchase of supplementary books and necessary equipment stopped. This is unacceptable. Therefore, through the Budget, this year we will provide an allowance of Rs. 6,000 for school-going children in Aswesuma beneficiary households to purchase school books and supplies.

¶ 09 We are aware of concerns in villages about whether Aswesuma beneficiaries are accurately selected. Some complain that they were not selected for Aswesuma nor for school support. Therefore, through the Ministry of Education, we have put in place a process to identify eligible children who are not in Aswesuma but should receive assistance, and to grant them the Rs. 6,000 before the next school term begins.

¶ 10 We also know that Aswesuma operates under four categories covering two million families: 0.4 million in one category, another 0.4 million in the second, 0.8 million in the third, and 0.4 million in the fourth. Of these, the first two categories—totaling 0.8 million families—were to exit the program on December 31. We have extended the first of these categories to March 31, 2025 by three months, and the second category to December 31, 2025 by one year.

¶ 11 We recognize issues between those currently receiving Aswesuma and those not receiving it. Re-evaluation done through the old system has limitations. Therefore, using data from the existing process and by re-verifying with the Grama Niladhari, Samurdhi officers, development officers, and social services officers, we will identify currently non-recipient but eligible families and ensure they receive Aswesuma benefits starting from April.

¶ 12 Aswesuma benefits are paid through banks. Normally opening a bank account requires a NIC, and obtaining a NIC requires a birth certificate. Some families identified as eligible could not open accounts and thus did not receive benefits for about 1.5 years due to lack of documents. The initial dataset had around 67,000 such families. These are issues that should have been promptly resolved. In consultation with the Central Bank, we decided to allow these beneficiaries to open bank accounts without a NIC for a limited period. They will also be paid arrears from the date of entitlement, not from the date the NIC is obtained.

¶ 13 I present these matters because some proposals must come to Parliament before the Budget is finalized. Some require passage in Parliament. If we wait to legislate after the Budget debate concludes—around March 21—we won’t be able to deliver benefits by April. Therefore, we aim to gazette these immediately and present them in Parliament in January. There will be a VAT amendment and several amendments to the Aswesuma Act. We trust you will extend your support.

¶ 14 Thank you very much.