November 20, Colombo (LNW):The Asian Development Bank (ADB) has approved a $200 million policy-based loan to support Sri Lanka’s efforts in reinforcing its financial sector. This marks the second subprogram under the ADB’s Financial Sector Stability and Reforms Program, building on stabilization measures introduced in 2023.
“Sri Lanka has made commendable progress in stabilizing macroeconomic conditions and enhancing its fiscal situation. ADB’s support focuses on instituting structural reforms in the financial sector to ensure sustainable recovery and resilience,” said Takafumi Kadono, ADB Country Director for Sri Lanka.
The subprogram aims to strengthen the governance of the banking sector and promote financial inclusion as part of Sri Lanka’s broader economic recovery plan. Key measures include enhancing the Central Bank of Sri Lanka’s (CBSL) regulatory supervision, introducing improved early warning systems, and implementing a new stress testing model to address solvency and liquidity challenges.
Additional reforms target the banking sector’s asset quality, providing guidance on managing credit concentration risks. Incentives will be offered to banks to support micro, small, and medium-sized enterprises (MSMEs), including women-led businesses, through guarantees and reduced collateral requirements.
The Ministry of Finance will expand financial inclusion for vulnerable groups by digitizing personal information to facilitate electronic transactions. A new policy framework will also improve access to finance for women-led MSMEs, with CBSL supporting financial institutions in identifying eligible entrepreneurs.
This loan underscores ADB’s commitment to fostering inclusive and resilient growth in Sri Lanka, with a focus on long-term stability and poverty alleviation. Established in 1966, the ADB continues to play a pivotal role in supporting sustainable development across Asia and the Pacific.
