The Asian Development Bank said on Friday that it has approved $200-million concessional loan to debt-stricken Sri Lanka to help stabilise the country’s finance sector following an unprecedented economic crisis that engulfed the Indian Ocean island nation last year. The bank’s announcement comes as Sri Lanka is awaiting International Monetary Fund approval for the second installment of a $2.9-billion bailout package to rescue the country from bankruptcy.
The ADB said its Financial Sector Stability and Reforms Program for Sri Lanka includes two subprogrammes of $200 million each that would help strengthen the stability and governance of the country’s banking sector, and deepen sustainable and inclusive finance, particularly for women-led micro, small, and medium-sized enterprises. The programme’s overarching development objective is fully aligned with the country’s strategy of maintaining finance sector stability, while ensuring that banks are well-positioned for eventual recovery, Takafumi Kadono, ADB’s director for Sri Lanka, said in a statement.
He added that the « expected development outcome is a stable financial system providing access to affordable finance for businesses in various sectors of the economy. Sri Lanka plunged into an economic crisis in 2022, creating severe shortages and drawing strident protests that led to the ouster of then-President Gotabaya Rajapaksa. It declared bankruptcy in April 2022 with more than $83 billion in debt more than half of it to foreign creditors.
