ADB approves $200m loan to boost Sri Lanka’s financial sector

Asian Development Bank (ADB) approved on Tuesday a $200 million policy-based loan to further support Sri Lanka’s efforts to strengthen its financial sector. This second subprogramme builds upon the initial stabilisation and crisis management measures implemented under the first subprogram approved in 2023.

“Sri Lanka has made significant progress in stabilising its macroeconomic conditions and improving its fiscal situation,” said ADB Country Director for Sri Lanka, Takafumi Kadono.

The policy reforms under subprogram 2 will help the Central Bank of Sri Lanka (CBSL) enhance its regulatory oversight of banks through an improved early warning system and a new stress testing model to identify and address potential risks.

The CBSL will guide credit concentration risk limits and encourage banks to offer favourable terms to micro, small, and medium-sized enterprises (MSMEs), particularly women-led businesses.

The Sri Lankan ministry of finance will formulate a policy framework to improve access to finance for women-led MSMEs, while the CBSL will support financial institutions in identifying eligible women entrepreneurs.

Attribution: Asian Development Bank report

Subediting: Y.Yasser