Katugasthota: The Asian Development Bank (ADB) approved a $100 million policy-based loan on July 11 to support and facilitate reforms aimed at enhancing the financial sustainability of the power sector in Sri Lanka and this agreement is expected to be signed next week, Takafumi Kadono, ADB Country Director for Sri Lanka, said.
He said soon after the agreement is inked they would start disbursing it for power sector development.
The ADB has also completed the disbursement of the Small and Medium-Sized Enterprise Line of Credit project (SMELoC), operated since 2016, amounting to approximately $350 million and the Strengthening the Regional Development Bank Project (SRDB project) amounting to $50 million in 2019.
As of end June 2024, 10,380 small and medium-sized enterprises (SMEs) have benefited from the SMELoC loan and out of this more than 33% were WSMEs and 1,553 WSMEs have received the We-Fi grant blended with SMELoC loan.
In May this year, the ADB approved a $ 100 million loan to support for small and medium-sized enterprises (SMEs) through two components: a new SME line of credit ($50 million) for those affected by the economic crisis to provide emergency working capital (SMELOC2 component); and a loan to the government for an equity infusion ($50 million) into the National Credit Guarantee Institution Limited (NCGI), which will provide partial credit guarantees (PCGs) on loans to SMEs with inadequate or no collateral (PCG component).
Out of the SMEs which operated in 2018 almost 20% are partially or temporarily shut down and 50% of the SMEs are struggling to pay their debt and another 50% were obtaining new loans to pay off their old debt, said, Director General, Department of Finance Development, Malarmathy Gangatharan.
She said that the Government, therefore, decided to support these SMEs and that is why since 2022 they have been negotiating with the ADB which resulted in approval of USD100 million for the SME sector.
Gangatharan said that these will be given through participatory financial institutions (13 banks) to entrepreneurs as working capital loans. He said Rs 10 million will be disbursed to entrepreneurs under a single digit rate. (maximum 8% rate) with a six months grace period and three years payback period including the six months grace period.
