SL secures US $ 165mn ADB loan as SME financing support

Finance Ministry Secretary S.R. Attygalle signed the loan agreement for GOSL and ADB Sri Lanka Resident Mission Country Director Chen Chen signed on behalf of ADB

The Asian Development Bank (ADB) and Government of Sri Lanka (GOSL) yesterday signed a US $ 165 million loan agreement to provide immediate financing support for small and medium-sized enterprises (SMEs), which have been severely affected by the coronavirus disease (COVID-19) pandemic and long-term financing to underserved SMEs, including businesses led by women and tea smallholders. 

Finance Ministry Secretary S.R. Attygalle signed the loan agreement for the GOSL and ADB Sri Lanka Resident Mission Country Director Chen Chen signed on behalf of ADB. 

“The government highly appreciates ADB’s long-term commitment to supporting Sri Lanka’s development. SMEs will be essential to recovery from COVID-19. The new loan from ADB will help the government’s efforts of supporting SMEs in and after the COVID-19 pandemic,” said Attygalle. 

“We are glad to be of assistance to the SME sector at this crucial juncture, when the sector has suffered a severe setback, due to the COVID-19 pandemic,” said Chen.

“We trust that this assistance will help SMEs to revive their businesses and contribute once again significantly to the Sri Lankan economy.” 

The new financing will build on the ongoing Small and Medium-Sized Enterprises Line of Credit Project, which ADB approved in 2016, to strengthen SMEs’ access to finance. 

The new loan will introduce a new credit line, co-financed with a US $ 1.25 million grant from the Japan Fund for Poverty Reduction (JFPR), to promote capital investment by tea smallholders. 

A supplemental US $ 1.75 million technical assistance grant from JFPR will build tea smallholders’ financial literacy and capacity to access financial services and develop policies to promote value chain development for the Sri Lankan tea industry, to strengthen its international competitiveness.