The Government has 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).
TThe 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 $ 65 million to upgrade and strengthen SME sector to meet the expectations of the country as the initial loans, $ 100 million $ 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 $ 9.5 million.
With the outbreak of coronavirus pandemic in early 2020, the Government requested to top up the initially planned loan of $ 65 million with USD 100 million as more assistance is required to mitigate the negative impact on SMEs.
Accordingly, out of the total $165 million; $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.
$45 million will be allocated for the continuation of the ongoing SME credit line 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.
The Loan and Grant Agreements to obtain $ 165 million worth of loan and $ 1.25 million worth of grant was signed by S R Attygalle, Secretary to the Ministry of Finance on behalf of the Government of Sri Lanka and Chen Chen, Country Director of ADB Sri Lanka Resident Mission on behalf of the ADB yesterday at the Ministry of Finance.