June 28, Colombo: Sri Lanka government has changed the interest rates of the concessionary property loans provided through the state banks with effect from June 15th.

The interest rate for Rs. 500,000 to Rs. 1,000,000 of the loan has changed to 8% and interest rate for loans from one million to three million has been increased to 11%. However, the interest rate for the first Rs. 500,000 remains unchanged at 4%.

The Ministry of Finance and Implementation Department says that the decision was taken on the request of the banks to increase the interest rate of these loans to 12.5%, as the current interest rates soared. Initially the public officials paid 4% interest while the government paid 6% interest to the banks. The new system reduces the burden on the government coffers.

The Ministry of Finance Implementation says that the cost the government bears in 2007 for the loans obtained by the public officials is approximately Rs. 950 million.

However, the trade unions protest the government’s decision to raise concessionary interest rates of the property loans for the public officials.