ADB provides second policy-based lending of USD 200 Mn
As the result of discussions between the Asian Development Bank (ADB) and the Government of Sri Lanka, Two policy-based loans (PBL) have been developed to implement the Financial Sector Stability and Reform Program in order to create a stable financial system that provides access to finance for businesses in various sectors of the economy.
The program adopts a programmatic modality with two subprograms of USD 200 million each. It will support implementing multi-year policy reforms, including immediate reforms to enhance the crisis management regulatory framework and stabilize the financial sector under Subprogram 1 and reforms to build a resilient and inclusive financial system under Subprogram 2.
Under the above program, the first PBL of USD 200 million was fully disbursed in December 2023, following the successful completion of all required prior policy actions under Subprogram 1 of the program. Since the relevant agencies have also successfully achieved all pre-policy actions related to Subprogram 02, the relevant entire USD 200 million loan proceeds will soon be disbursed to the Treasury. The loans are provided under ADB concessionary Ordinary Capital Resources with a 25-year term, including a 5-year grace period, and an interest rate of 2% per year.
The Ministry of Finance, Planning and Economic Development will be the executing agency of the above program and implement the policy actions in collaboration with the Central Bank of Sri Lanka and other relevant institutions.
Today, the loan agreement for policy-based lending for Subprogram 2 was signed between the Government of Sri Lanka and the ADB at the Treasury in Colombo K. M. Mahinda Siriwardana, Secretary, Ministry of Finance, Planning and Economic Development and Takafumi Kadono, Country Director, ADB Sri Lanka Residence Mission, placed signatures on behalf of the Government of Sri Lanka and the Asian Development Bank respectively.
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