🇱🇰 MSME Recovery Blueprint: Essential for Post-Cyclone Economic Resilience

• Micro, Small & Medium Enterprises (MSMEs) are the backbone of Sri Lanka's economy, accounting for over 90% of all enterprises, contributing ~52% to GDP, and providing ~45% of employment. • Cyclone Ditwah and subsequent flooding threaten thousands of these businesses, which were already severely weakened by the COVID-19 pandemic, the 2022-23 economic crisis, and high interest rates. • A comprehensive, three-phase policy blueprint is urgently required to prevent a deep collapse and secure economic recovery: Phase 1: Immediate Relief • Focus on rapid, targeted unconditional grant support for businesses in disaster-hit divisions. • Implement temporary tax deferrals, penalty waivers, and fast-track VAT refunds. • Central Bank/Banks to provide short-term loan moratoriums and necessary regulatory flexibility. Phase 2: Recovery & Reconstruction • Introduce concessional "build-back-better" credit lines with below-market rates for replacing assets and premises. • Utilize Government public procurement with temporary preferences for affected local MSMEs. Phase 3: Building Long-Term Resilience 📈 • Integrate MSME resilience as an explicit objective in national disaster-risk planning. • Develop affordable, risk-sharing mechanisms like index-based insurance and group schemes. • Promote green and climate-resilient MSME investment through tax incentives and specialized loan products. • The proposal emphasizes that acting decisively now is critical to convert tragedy into a turning point towards a more resilient and sustainable economy.