Sri Lanka’s banking and finance sector on strong footing with World Bank and IMF support
The Morning: Sri Lanka’s banking and financial sector is to safeguard 100% once the World Bank grants $ 150 million following the International Monetary Fund’s (IMF) grant second tranche under its Extended Fund Facility (EFF) programmed to Sri Lanka, said President Ranil Wickremesinghe.
He made these remarks in Parliament on 13 December as the Minister of Finance, Economic Stabilization and National Policies. “Financial institutes such as Asian Development Bank (ADB) and JICA (Japan International Cooperation Agency) are to provide financial grants to the country for development on low interest and concessional conditions.”
Wickremesinghe added that the foreign investors also can easily invest in the country without uncertainty or fear while letter of credit (LCs) are being accepted internationally which means the country has to take the most of the benefit out of these chances.
He also said that receiving the second tranche alone does not mean Sri Lanka will gain complete economic freedom, and the island has a long way forward. The IMF Board provided the country with access to SDR 254 million which is about $ 337 million on 12 December.
Issuing a statement in this regard, the IMF said: “The authorities have made commendable progress toward restoring debt sustainability, raising revenue, rebuilding reserves buffers, reducing inflation, and safeguarding financial stability. Strong commitment to improving governance and protecting the poor and vulnerable remains critical.”
Sri Lanka’s EFF arrangement is SDR 2.286 billion (about $ 3 billion) as of the time of programmed approval on 20 March 2023.
OSL take:
Sri Lanka has a strong banking sector that has shown a steady performance even amidst challenging economic conditions faced by the country in the past few years. A strong banking network is a prerequisite for a country working towards becoming an emerging business destination in the South Asian region and attracting foreign businesses/investors to Sri Lanka. The ongoing economic activities in Sri Lanka and the growth and business potential of the country are all attractions for foreign businesses/investors to look at Sri Lanka to set up base. Foreign businesses could also look at forming partnerships or joint ventures with local businesses with the aim of further expansion, locally and internationally.
| Article Code : | VBS/AT/20231220/Z_8 |