Sri Lanka Stock Exchange launches list of small businesses amid faltering economy
COLOMBO, July 5 (Reuters) – The Sri Lankan stock exchange on Thursday began listing small and medium-sized businesses in a bid to grant access to cheaper finance that could help revive a struggling economy.
Sri Lanka’s economy grew 3.3% in 2017, the slowest pace since a recession in 2001. Government officials predicted growth of around 4.5% this year, lower than the bank’s forecast 5% power plant.
Small and medium-sized businesses account for 52% of the country’s $ 87 billion economy and most of them struggle to keep up with higher borrowing costs as financial institutions are reluctant to lend. due to past non-performing loans.
The Colombo Stock Exchange has launched the new listing for small businesses that have a minimum stated capital of 25 million rupees ($ 157,332), far less than the 500 million rupees of capital required to be listed on the main board.
Rajeeva Bandaranaike, CEO of the exchange, said the new initiative has made listing easier for small businesses.
Prashan Fernando, CEO of Acuity Stockbrokers, said the move would help small businesses access lower cost financing compared to the current cost of borrowing of between 16% and 22% from banks and finance companies.
The main stock index has trended lower due to tight monetary and fiscal policies, weaker economic growth and political uncertainty. The index has fallen around 4% so far this year with gloomy trading conditions.
$ 1 = 158.9000 Sri Lankan rupees Report by Shihar Aneez; Editing by Kirsten Donovan