Press Releases

 

Marking a significant milestone in the official debt treatment process, the Government of Sri Lanka reached the final agreement on its debt treatment with members of the Official Creditor Committee (OCC) of Sri Lanka’s bilateral creditors on June 26, 2024. As a longstanding development partner of Sri Lanka, the Government of Japan supported the initiation of the coordination platform with Sri Lanka’s bilateral creditors, and played a vital role throughout the process of reaching the agreement with the OCC..

The conclusion of the agreement with the OCC, and significant progress in restructuring debt with other creditors, along with the commitment of the Government of Sri Lanka to implement comprehensive macroeconomic reforms supported by the International Monetary Fund and other multilateral partners, has enhanced confidence in the economic stability and debt sustainability of Sri Lanka.

The Government of Japan announced its crucial decision of resuming disbursement for the Japan funded project portfolio of the country, signaling confidence in Sri Lanka’s economic reform programme and renewed optimism regarding the future prospects of the country. With this landmark decision, the suspended projects, including the Bandaranaike International Airport Development Project, utility projects, health sector improvement projects, rural development projects, etc., will be resurrected, paving the way for the economic and social improvement of the country.

The Bandaranaike International Airport Development Project, in particular, is critical for developing Sri Lanka’s connectivity related infrastructure which would be a major boost for key sectors such as tourism, trade, and investment.

The official announcement of Dr. TANAKA Akihiko, President of Japan International Cooperation Agency (JICA) on the resumption of the disbursement was handed over to Mr. K.M. Mahinda Siriwardaena, Secretary to the Treasury and the Ministry of Finance, Economic Stabilization and National Policies, by Ms. IDE Yuri, Senior Representative of the JICA Sri Lanka Office.

Mr. K.M. Mahinda Siriwardaena, Secretary to the Treasury and the Ministry of Finance, Economic Stabilization and National Policies, expressed his sincere gratitude on behalf of the Government of Sri Lanka to the Government of Japan for their pivotal role throughout the debt treatment process and being the foremost decision taker to refinance the ongoing infrastructure development projects.

Ministry of Finance, Economic Stabilization and National Policies
Colombo 01
On July 24, 2024.

 

A delegation of NEDA comprising Mr. Rappipat Promnart, Director of Policy and Planning Bureau & Mr. Wasit Anuntavichien, Policy and Planning Analyst of the Neighbouring Countries Economic Development Agency (NEDA) visited Sri Lanka during April 09 -10, 2024. The delegation who arrived at the request of ERD, met Mr. Ajith Abeysekera, Director General, Department of External Resources (ERD) and other Treasury Officials on the 09th of April, 2024. This meeting was a stepping stone to embark on a promising future collaboration between Thailand and Sri Lanka in terms of development cooperation.

Commenting on the longstanding cultural ties between Thailand Sri Lanka, the Director General of ERD, welcomed the NEDA’s Technical & Financial Assistance. Further, the Director General, mentioned about the potential NEDA support for the Sri Lanka’s proposed Public Debt Management Office (PDMO). Mr. Rappipat Promnart, Director of Policy and Planning Bureau warmly welcomed the proposal and invited around 20 officials from the potential officers who will be engaged in working with the proposed PDMO, to visit Thailand Debt Management Office during October/ November. Moreover, the delegation expressed their willingness to extend soft loans with indicative terms and conditions to priority sectors in Sri Lanka. The Department of External Resources pointed out the necessity to have further discussion on the proposed terms and conditions of the loans, such as procurement of at least 50% of goods and services from the Thailand and also highlighted the present challenges emanating from the ongoing debt restructuring process of Sri Lanka.

Further, ERD emphasized the importance of obtaining NEDA support in terms of investment & projects in the PPP modality. It was agreed to discuss these matters in depth in the coming months. Additionally, Director General of Department of National Planning explained the strategic direction of public investments in Sri Lanka. Last but not least, DG, ERD reiterated the importance of continuing these partnership and the commitment of the Government of Sri Lanka to foster and sustain such relationships which will derive mutual benefits for both parties.

Further, Government of Sri Lanka is closely working with the Thailand International Cooperation Agency (TICA) at present with regard to the Two Year Implementation Plan between Thailand and Sri Lanka for 2023 – 2024 for the priority sectors such as Community Based Tourism, small industries development, marine ornamental fish breeding and capacity building programmes for Government officials in Sri Lanka.

 

Department of External Resources
Ministry of Finance, Economic Stabilization and National Policies
Colombo 01
On April 10, 2024.

 

 

At the request of the Government of Sri Lanka, the Government of Japan has agreed to provide grant assistance amounting to Japanese Yen one thousand and Six hundred million (approximately LKR 3.3 billion) under the Japanese Economic and Social Development Programme, considering the requirements of diversified fields namely marine environment, healthcare, vocational training and fishing.

The Exchange of Notes pertaining to the above grant were signed by the Secretary to the Ministry of Finance, Economic Stabilization, and National Policies, Mr. K.M. Mahinda Siriwardana, on behalf of the Government of Sri Lanka and His Excellency the Ambassador of Japan in Sri Lanka, Mr. MIZUKOSHI Hideaki on March 18, 2024.
The following activities will be implemented under the above grant assistance.

a) Provision of four vessels for oil boom with the necessary accessories, a generator, and a cargo truck with a crane for improving oil spill response and management of the Sri Lanka Coast Guard;

b) Provision of portable ultrasonic scanners, gynecological examination tables, a laparoscopic system, mammography, fetal heart raters, and infant warmers for improving the maternal and pediatric care in Northern Province and industrial sewing machines, zigzag (industrial) machines, overclock (5 thread) machines, and button holder (5 thread, industrial) machines for dressmaker courses at vocational training centers in Northern Province;

c) Provision of a petrol boat, a rigid-hull inflatable boat, lighted buoys, and HG radio transceivers, for ensuring the safety of fishermen in Northern and Eastern provinces;

The Agent Agreements for the procurement of equipment and implementation of above projects were signed between Mr. Ajith Abeysekera, Director General, Department of External Resources on behalf of the Government of Sri Lanka, and Mr. NOMURA Tetsuya, Project Manager, Japan International Cooperation System (JICS), on April 24, 2024, at the Ministry of Finance, Economic Stabilization, and National Policies.

Ministry of Finance, Economic Stabilization and National Policies
Colombo 01
On April 24, 2024

 

 

Since 2015, the Government of Sri Lanka engaged in discussions with the Asian Development Bank (ADB) to mobilize necessary financial assistance amounting to USD 452.5 million to support the Small and Medium – Sized Enterprises (SMEs) of the country.

Accordingly, the original credit line of USD 100 million, which is a financial intermediation loan through 10 participating financial institutions (PFIs) to eligible SME subprojects became effective in April 2016. The loan was financially closed in January 2019, 1.5 years earlier than the initial plan. It had exceeded development targets on reaching out to underserved SMEs, including women-led, first-time borrowers, and those located outside Colombo. Considering the high demand from the sector, an additional USD 75 million (the first additional financing) and a USD 9.5 million grant (the second additional financing) from We-Fi were mobilized in 2018 as further assistance to the sector.

In November 2020, the Government of Sri Lanka entered into loan and grant agreements with ADB to obtain another loan of USD 165 million and grants worth of USD 3 million from the Japan Fund for Poverty Reduction (JFPR), to provide further assistance as a credit line to SMEs.

Since 2022, the Ministry of Finance, Economic Stabilization and National Policies continuously engaged in discussions with ADB to ensure further assistance to the SME Sector which faced severe difficulties due to the effects of unprecedented COVID 19 pandemic and consequent economic crisis situation and hence, had negotiations with ADB in 2023 to mobilize USD 100 million and Technical Assistance (TA) on grant basis to finance the “Enhancing Small and Medium-sized Enterprises (SME) Finance Project” in order to further enhance SME’s access to finance.

This project is an important component of the government’s comprehensive economic reform strategy. The reform measures implemented over the last 2 years have been successful in stabilizing the economy, and in parallel, measures have been put in place to shift economic trajectory from stabilization to growth. Considering the fact that revitalisation of the SME sector is a crucial component of economic recovery, the government commenced technical discussions with ADB over a year ago in order to design this project to address key financial constraints faced by SMEs.

As the backbone of Sri Lanka's economy, SMEs represent over 75 percent of all businesses, and contribute more than 50 percent to the country's Gross Domestic Production (GDP). SMEs are estimated to generate employment for over 45% of the workforce, thereby creating significant spill-over impacts on the economy as a whole. Following significant challenges stemming from a series of shocks, including the COVID-19 pandemic and the prevailing economic downturn, the SME sector has faced substantial disruptions to their normal business operations largely due to factors beyond their control. Accordingly, the Government of Sri Lanka considered it a priority to address these challenges through early interventions, of which this project is a key component. USD 50 million of the ADB financing will be allocated towards a SME line of credit loan scheme which will facilitate easier access to finance for SMEs. This will be a crucial financial injection which will support the stabilization of SMEs and set the foundation for sustainable growth and SME’s contribution to the recovery of the Sri Lankan economy.

One of the key challenges faced by SMEs in the past has been the inability to adequately utilize credit lines or concessional loan schemes due to perceived credit risk and associated requirements for collateral and guarantees. To remedy this constraint, the Government has taken a strategic step by incorporating the National Credit Guarantee Institution (NCGI) as a public limited company, to address the issue of collateral and guarantees. This initiative aims to provide partial credit guarantees for SMEs, offering them a sustainable solution to their financing challenges. USD 50 million of the ADB financing will be allocated as the Government's initial capital infusion into the NCGI.

The Ministry of Finance, Economic Stabilization and National Policies (MOF) will be the executing agency of the above program and will implement the project in collaboration with the Department of Development Finance and NCGI.

The loan agreement to borrow the above loan of USD 100 million was signed between the Government of Sri Lanka and the Asian Development Bank today at the General Treasury in Colombo. Mr. K. M. Mahinda Siriwardana, Secretary to the Treasury, and the Ministry of Finance, Economic Stabilization and National Policies, placed his signature on behalf of the Government of Sri Lanka, and Mr. Utsav Kumar, Principal Country Economist, ADB Sri Lanka Residence Mission, signed on behalf of the Asian Development Bank.

Department of External Resources
Ministry of Finance, Economic Stabilization and National Policies
25 March 2024