Committee votes to allow SME refinancing for Covid-19 loans

The parliament Committee on State Owned Enterprises has recommended that small and middle-income enterprises be given the opportunity to refinance loans issued to them through policy adjustments for SDFC, the SME Development Finance Corporation.

The Committee on State Owned Enterprises had reviewed the issue of moratoriums given to small and middle-income enterprises to repay loans running out, and had compiled a report on their findings.

In the report, the Committee on State Owned Enterprises had noted the importance of prioritizing sustainable businesses in issuing loans to small and middle-income enterprises, and of banks giving out loans with the lightest possible financial burden. The committee decided to instruct Bank of Maldives and the Maldives Islamic Bank to expedite the process for businesses that meet the criteria for the issuance of the loan. The report also notes that in selecting businesses eligible for loans, their performance before and after the Covid-19 pandemic should be considered in order to provide support to the businesses impacted by the pandemic.

The committee report also highlights that as MVR 400 million will be issued in loans to small and middle-income enterprises from the state's budget in 2021, a robust mechanism must be created to allocate the loans to the businesses that need them most. The report also stated that due to the present state of the Maldivian economy, small and middle-income enterprises should be given additional support to grow sustainably, and that those businesses looking to refinance loans taken earlier should be given the opportunity to do so through policy adjustments for SDFC.

The report also requires that the Business Center Corporation prepare a progress report within six months based on the establishment of an incubation facility for SMEs, which will involve providing small and middle-income businesses with work space and other essential resources in order to help them cut down initial costs. The report also instructs the Privatization and Corporatization board to ensure that state owned enterprises are implementing government policies to increase the value of goods and services sold by SMEs.

In addition to this, the committee report also calls for re-evaluation of the status of SMEs and to provide eases for those businesses struggling to repay loans, in order to prevent stressed accounts from defaulting, and also calls for banks to establish a mechanism to restructure those loans.

A meeting held on 22 April for the Committee on State Owned Enterprises saw all MPs in attendance vote unanimously in favor of expanding the support given to SMEs by various state owned enterprises.