Economic Lubricant

Feb 26, 2009 (LBO) – Sri Lanka’s cabinet of ministers has approved a bailout package for finance and leasing firms in a move to release assets seized from defaulting borrowers back into productive commercial use.

“Equally, people who have bought lorries and lands will be able to once more use these assets for the purpose for which they bought them.”

International trade minister G L Pieris said assets like vehicles and lands seized from defaulting borrowers became unproductive and were a drag on the economy.

The 4.2 billion rupees stimulus package approved by the cabinet would help to restore public confidence in the financial system, which has been rocked by the collapse of two finance companies that operated outside the supervision of the central bank.

“Today many people who bought vehicles and lands find themselves unable to make their monthly payments to finance and leasing companies,” Pieris told a news conference Thursday.

“It seems these lorries and lands are today in a totally unproductive state,” Pieris said. “They have been seized by finance companies and are lying around in the gardens and yards of these finance companies.”

The cabinet put together the stimulus package to e