Sri Lankan government receives additional ADB funding for SME Line of Credit Project
The government of Sri Lanka has signed a loan agreement with Asian Development Bank (ADB) to obtain additional funding for a Small and Medium Enterprise (SME) Line of Credit Project.
The Finance Ministry of Sri Lanka issuing a statement notes that the government had obtained ADB financial assistance of US$ 100 million in 2016 to finance the SME Line of Credit Project. The objective of the project was to strengthen the SME sector in Sri Lanka by facilitating access to finance and expand the employment opportunities in the sector.
According to the Finance Ministry, the project is being successfully implemented and given the importance of this intervention.
The Sri Lankan government has decided to obtain an additional financing through a loan of US$ 75 million with the intention to scale up the ongoing SME Line of Credit Project.
The Additional financing is to be utilised to increase financing 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 the information and communication technology/business process outsourcing (ICT/BPO) cluster.
The additional loan of US$ 75 million is planned to be disbursed in three tranches of approximately US$ 25 million each.
The government will relend 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 relending to the SMEs based on the previously agreed targets between the ADB and the government, focusing especially on first time borrowers, women-led SMEs and SMEs located outside of Colombo, etc.
The Finance Ministry has noted that 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 the 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 the information and communication technology/business process outsourcing (ICT/BPO) cluster.
The overall project is scheduled to be completed by end of March 2020.
OSL take:
The additional ADB funding would further expand the Sri Lankan government’s SME credit line project. It would provide the opportunity for local start ups as well as women looking at starting businesses to gain access to finances required to commence their businesses.
| Article Code : | VBS/AT/20180222/Z_3 |