ADB approves US $ 200mn loan for SL’s financial sector stability and reform

The Asian Development Bank (ADB) would provide a US $ 200 million policy-based loan to support Sri Lanka’s Financial Sector Stability and Reform Programme, Subprogram Two, the Finance Ministry said. 

The loan agreement was signed on Monday at the Treasury in Colombo.

The programme comprises two US $ 200 million subprograms designed to implement multi-year policy reforms to create a stable financial system that provides access to finance for businesses across various sectors of the economy. 

Subprogram One focused on enhancing the financial sector’s crisis management framework. US $ 200 million was fully disbursed in December 2023, following the successful completion of all required policy actions.

Subprogram Two seeks to build a resilient and inclusive financial system. 

The Finance Ministry said all pre-policy actions for Subprogram Two have been successfully completed and the US $ 200 million loan proceeds would soon be disbursed to the Treasury.

The loans, provided under the ADB’s concessional Ordinary Capital Resources, carry a 25-year term, including a five-year grace period, with an interest rate of 2 percent per annum. 

The Finance, Planning and Economic Development Ministry will execute the programme in collaboration with the Central Bank of Sri Lanka and other relevant institutions.