Govt incorporates National Credit Guarantee Institution as public limited company
In a bid to address one of the key challenges faced by SMEs, inability to adequately utilize credit lines or concessional loan schemes due to perceived credit risk and associated requirements for collateral and guarantees, the Government has taken a strategic step by incorporating the National Credit Guarantee Institution (NCGI) as a public limited company.
This initiative aims to provide partial credit guarantees for SMEs, offering them a sustainable solution to their financing challenges. USD 50 million of the ADB financing will be allocated as the Government’s initial capital infusion into the NCGI. The Ministry of Finance, Economic Stabilization and National Policies (MOF) will be the executing agency of the above program and will implement the project in collaboration with the Department of Development Finance and NCGI. Since 2022, the Ministry of Finance, Economic Stabilization and National Policies continuously engaged in discussions with ADB to ensure further assistance to the SME Sector which faced severe difficulties due to the effects of unprecedented COVID 19 pandemic and consequent economic crisis situation and hence, had negotiations with ADB in 2023 to mobilizeUSD 100 million and Technical Assistance (TA) on grant basis to finance the
“Enhancing Small and Medium-sized Enterprises (SME) Finance Project” in order to further enhance SMEs access to finance. This project is an important component of the government’s comprehensive economic reform strategy. Considering the fact that revitalization of the SME sector is a crucial component of economic recovery, the government commenced technical discussions with ADB over a year ago in order to design this project to address key financial constraints faced by SMEs.
Financing of USD 100 million from the Asian Development Bank will boost Small and Medium-sized Enterprises (SME) of Sri Lanka. As the backbone of Sri Lanka’s economy, SMEs represent over 75 percent of all businesses, and contribute more than 50 percent to the country’s Gross Domestic Production (GDP).
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