ADB gives USD 75mn for lending to Sri Lanka’s small businesses

Feb 16, 2018 (LBO) - Sri Lanka has decided to obtain an additional financing through a loan of US 75 million dollars from the Asian Development Bank to scale up the ongoing Small and Medium Enterprise (SME) line of credit project, the Finance Ministry said. The Government had earlier obtained ADB financial assistance of US 100 million dollars in 2016 to finance the SME enterprises with the objective of strengthen the  sector by facilitating access to finance and expand the employment opportunities. The additional financing will be utilized to Increase of financing to SMEs through intermediaries, development of innovative SME financing scheme, enhancement of capacity of SMEs in targeted clusters for accessing financial services and strengthening of international competitiveness of information and communication technology/business process outsourcing (ICT/BPO) cluster. It will be disbursed in 3 tranches of approximately US 25 million dollars each.
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The Government will re-lend the loan funds in local currency to participating banks through three semiannual allocations based on the banking sector’s average weighted deposit rate. The proceeds of the loan will be available to the participating banks for re-lending to the SMEs based on the previously agreed targets between the Asian Development Bank and the Government specially focusing on first time borrowers, women-led SMEs and SMEs located outside of Colombo etc. The Ministry of Finance and Mass Media will be the executing agency of the SME Line of Credit (Additional Financing). The Department of Development Finance will be the Implementing Agency for Outputs of Increase of financing to SMEs through intermediaries, Development of innovative SME financing scheme and Export Development Board will be the implementing agency for outputs of Enhancement of capacity of SMEs in targeted clusters for accessing financial services and Strengthening of international competitiveness of information and communication technology/business process outsourcing (ICT/BPO) cluster. The overall project is scheduled to be completed by 31^st March 2020.