The Department of External Resources announced yesterday the obtaining of additional loan of USD 75 million from the Asian Development Bank to finance the Small and Medium-Sized Enterprises (SME) Line of Credit Project launched in 2016 with USD 100 million from the ADB.
The Department of External Resources coming under the Ministry of Finance issuing a statement in this regard said yesterday:
The Government of Sri Lanka to finance the Small and Medium-Sized Enterprises (SME) Line of Credit Project had obtained ADB Financial assistance of USD 100 million in 2016. 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.
The project is being successfully implemented and given the importance of this intervention, the Government of Sri Lanka decided to obtain an additional financing through a loan of USD 75 million with the intention to scale up the ongoing SME Line of Credit Project.
Dr. R H S Samaratunga, Secretary to the Ministry of Finance and Mass Media on behalf of the Government of Sri Lanka and Ms. Sri Widowati, Country Director of ADB – Sri Lanka Resident Mission on behalf of ADB, signed this loan agreement to obtain USD 75 million at the Ministry of Finance and Mass Media on 16 February
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.
The additional loan of USD 75 million is planned to be disbursed in 3 tranches of approximately USD 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 Asian Development Bank and the Government specially focusing on first time borrowers, women-led SMEs and SMEs located outside of Colombo etc. Further, participatory banks should achieve SME on-lending targets before participating in subsequent allocations.