Charter of the Economy ii) An interest rate policy which does not lead to a big positive divergence between the nominal interest rate on bank lending and the rate of inflation, thereby increasing the real cost of borrowing. iii) Higher level of public investment especially in electricity generation and distribution, in increased capacity of transport infrastructure and higher outlays on technical and vocational training of workers. iv) An appropriate exchange rate policy which does not lead to a disproportionate in­crease in the cost of imported machinery. v) Relatively high level of corporate profitability raised by the presence of a moderate tax rate on corporate profits and effective fiscal incentives to bolster new investment and in BMR. The target should be to bring down the corporate tax rate to 25 percent by 2024-25 from 29 percent currently. vi) Appropriate fiscal incentives for investment in the export sectors and to units in the Special Economic Zones and in the Special Technology Zones. Greater Access to Financing: There are three potential sources of financing including investment of retained profits, access to bank credit and flotation of shares in the stock market. Small investors have generally had to rely on self-financing, either through deployment of profits or by access to loans in the informal sector. Estimates of financing of private investment by the corporate sector indicate that the share of retained profits is close to 55 percent, and that of long-term borrowing from the banking system and equity are 35 percent and10 percent respectively. Specific proposals for improved access to financing are as follows: • SBP to target for minimum credit ratios for lending by the banking sector to the private sector. A system of tax credits may be put in place to bolster lending by the commercial banks to the private sector and SMEs especially. • Increase in the tax deductibility provision in the Income Tax Ordinance for write-off of non-performing loans to SMEs, to small farmers and to low-cost housing. • Introduction of an effective foreclosures law against non-performing housing loans, probably of the type existing in Sri Lanka. This has been put in place recently. • Introduction of a Credit Guarantee Scheme by the SBP on agricultural loans in view of risk of floods, excessive rains fall or drought. • Lower interest rates for low- cost housing through a special refinancing scheme by the SBP. Such a scheme has been put in place in 2021 with an interest rate of 5 percent. Fiscal Incentives: The Income Tax System, as embodied in the ITO, has some fiscal incentives for promoting investment as follows: 148