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The government of Sri Lanka entered into loan and grant agreements with the Asian Development Bank (ADB) to obtain a loan of USD 165 million and grants worth of USD 3 million from the Japan Fund for Poverty Reduction (JFPR), to provide a credit line to the Small and Medium – Sized Enterprises (SMEs) through ten qualified Participating Financial Institutions (PFIs). The Ministry of Finance will be the Executing Agency of the Project, “Third Additional Financing of the Small and Medium – Sized Enterprises Line of Credit (SMELoC Third Additional Financing) Project” funded under the above loan and the grants.

In accordance with the National Policy Framework of the Government “ Vistas of Prosperity & Splendour”, it was decided to provide more assistance to the SME Sector by providing an additional loan of USD 65 million to upgrade and strengthen SME sector to meet the expectations of the country as the initial loans, USD 100 million USD 75 million from ADB have already been utilized. The Government’s objective is to maximize the beneficiaries of these financial assistance which are currently recorded as 1,755 SMEs supported by the first loan and 1,774 SMEs supported by the second loan and supplementary We-Fi grant, which is USD 9.5 million.

With the outbreak of coronavirus pandemic in early 2020, the Government requested to top up the initially planned loan of USD 65 million with USD 100 million as more assistance is required to mitigate the negative impact on SMEs. Accordingly, out of the total USD 165 million;

  1. USD 100 million will be allocated as SME Emergency Response Component for re-energizing the affected SMEs by providing short-term working capital in the productive sectors including, manufacturing, agriculture & agro processing, fisheries, tourism, export oriented businesses etc.
  2. USD 45 million will be allocated for the continuation of the ongoing SME credit line
  3. USD 20 million will be allocated for providing affordable credit line to tea smallholders on a pilot basis (This component will be supported by USD 3 million technical and financial Grants)

The loan funds will be channeled through ten qualified PFIs, namely People’s Bank, Bank of Ceylon, Pradeshiya Sanwardana Bank, Commercial Bank of Ceylon Public Limited Company (PLC), Sampath Bank PLC, Hatton National Bank PLC, DFCC Bank PLC, National Development Bank PLC, Nation’s Trust Bank PLC and Seylan Bank. The overall project is scheduled to be completed by 30th September 2023.

In this connection, Mr. S R Attygalle, Secretary to the Ministry of Finance on behalf of the Government of Sri Lanka and Mr. Chen Chen, Country Director of ADB Sri Lanka Resident Mission on behalf of ADB, signed the Loan and Grant Agreements to obtain USD 165 million worth of loan and USD 1.25 million worth of grant on 25th November 2020 at the Ministry of Finance.

This Press Release is issued by the Department of External Resources on 25th November 2020.

 

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