Sri Lanka’s Central Bank introduces new credit schemes to boost post Covid 19 economy
The Monetary Board of the Central Bank of Sri Lanka (CBSL) has decided to introduce new credit schemes under the Section 83 of the Monetary Law Act No. 58 of 1949 in order to boost the country’s economy that is trying to return to normalcy following the closure due to the global Covid 19 pandemic.
Accordingly, in addition to the already disbursed Rs. 27.5 billion under the refinance scheme introduced on 27 March 2020, the Central Bank will provide funding to Licensed Commercial Banks (LCBs) at the concessionary rate of 1.00 per cent against the pledge of a broad spectrum of collateral, on the condition that LCBs in turn will on-lend to domestic businesses at 4.00 per cent, while ensuring the greatest possible distribution of this facility.
This scheme along with the existing refinance Scheme will provide Rs. 150 billion in total to the businesses affected by the Covid-19 pandemic.
In addition, the construction sector enterprises will be provided with a facility to borrow from LCBs, using guarantees issued by the government equivalent to the amount due on account of contracts carried out in the past, under a new dedicated credit scheme funded by the Central Bank and made available at the aforementioned concessionary rates.
The government of Sri Lanka has introduced many mechanisms to help revive the country’s economy that faced a total shut down due to the Covid 19 global pandemic. However, Sri Lanka’s economy has shown resistance through the years to external and internal pressures. Therefore, Sri Lanka’s economy is expected to recover at a faster pase than the rest of the countries in the region. Sri Lanka’s geographical positioning, the ease of doing business environment, the many trade agreements as well as trade concessions enjoyed by the country will benefit the island retain its position as a business hub in the South Asian region. Foreign businesses/investors could therefore explore business/investment opportunities in Sri Lanka with confidence.
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