$75m more from ADB to boost SMEs

$75m more from ADB to boost SMEs

The Government on Friday signed a loan agreement with Asian Development Bank (ADB) to obtain additional funding for a Small and Medium Enterprise (SME) Line of Credit Project.

The Finance Ministry said in a statement the Government had obtained ADB Financial assistance of $100 million in 2016 to finance the SME Line of Credit Project. The objective of the project was to strengthen the SME sector in Sri Lanka by facilitating access to finance and expand the employment opportunities in the sector.

The project is being successfully implemented and, given the importance of this intervention, said the Ministry, the Government decided to obtain an additional financing through a loan of $75 million with the intention to scale up the ongoing SME Line of Credit Project.  The Additional financing will be utilised to increase of financing to SMEs through intermediaries, development of innovative SME financing scheme, enhancement of capacity of SMEs in targeted clusters for accessing financial services and strengthening of international competitiveness of the information and communication technology/business process outsourcing (ICT/BPO) cluster.

The additional loan of $75 million is planned to be disbursed in three tranches of approximately $25 million each. The Government will relend the loan funds in local currency to participating banks through three semiannual allocations based on the banking sector’s average weighted deposit rate. The proceeds of the loan will be available to the participating banks for relending to the SMEs based on the previously agreed targets between the Asian Development Bank and the Government, focusing especially on first time borrowers, women-led SMEs and SMEs located outside of Colombo, etc. Further, participatory banks should achieve SME on-lending targets before participating in subsequent allocations.

The Ministry of Finance and Mass Media will be the Executing Agency of the SME Line of Credit (Additional Financing). The Department of Development Finance will be the Implementing Agency for outputs of increase of financing to SMEs through intermediaries, development of innovative SME financing scheme and the Export Development Board will be the implementing agency for outputs of enhancement of capacity of SMEs in targeted clusters for accessing financial services and strengthening of international competitiveness of the information and communication technology/business process outsourcing (ICT/BPO) cluster.  The overall project is scheduled to be completed by 31 March 2020.

Treasury Secretary Dr. R. H. S.Samaratunga, on behalf of the Government and ADB Country Director Sri Widowati signed this loan agreement to obtain $75 million at the Ministry of Finance and Mass Media on Friday.

Courtesy : DailyFT

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