The International Finance Corporation (IFC), a member of the World Bank Group, has announced a significant investment program of $166 million aimed at bolstering Sri Lankan businesses and facilitating the country’s shift from economic stabilization to sustainable growth. This move underscores IFC’s longstanding commitment to Sri Lanka’s private sector.
This expansive financing package targets the expansion of financial access for small and medium-sized enterprises (SMEs), with a particular focus on supporting women-owned businesses and the agribusiness sector. By concentrating on these crucial areas of Sri Lanka’s economy, the initiative seeks to foster inclusive growth and create job opportunities for underserved communities.
The investment strategically involves three of Sri Lanka’s leading commercial private banks: Nations Trust Bank (NTB), Commercial Bank of Ceylon (CBC), and National Development Bank (NDB). The package includes a $50 million loan, $80 million in Risk-Sharing Facilities (RSFs), and $36 million dedicated to trade finance support.
SMEs represent over 75 percent of Sri Lankan businesses and account for 45 percent of jobs, yet access to credit remains a considerable challenge to their growth. In alignment with the priorities of both the World Bank Group and Sri Lanka, this partnership aims to provide targeted solutions for SMEs, enabling them to overcome obstacles and bolster the country’s economic resilience in the long term.
Allen Forlemu, IFC Regional Industry Director for the Financial Institutions Group in Asia and the Pacific, emphasized the vital role of SMEs in Sri Lanka’s economy, stating, “SMEs are the undisputed backbone of Sri Lanka’s economy, and their growth is essential for creating jobs. During periods of crisis, IFC plays a critical counter-cyclical role by stepping in when private capital pulls back. This investment in Sri Lanka’s financial sector reflects that commitment. By helping banks channel capital to women-led businesses, smallholder farmers, and sectors driving recovery, we are enabling Sri Lanka not just to rebound, but to grow forward with greater resilience and inclusivity.”
Imad Fakhoury, IFC Regional Division Director for South Asia, reiterated IFC’s dedication to fostering inclusive financing, remarking, “As part of our One World Bank Group approach, IFC is dedicated to unlocking new inclusive financing streams and ensuring that prosperity reaches the front lines of Sri Lanka’s economy. Strengthening the country’s financial ecosystem means equipping banks with the capacity, tools, and confidence to extend finance where it is most needed.”
The investment includes a $50 million financing to NTB, marking the first IFC-funded debt investment in Sri Lanka’s financial sector post the 2022 economic crisis. Of this total, $7.5 million, or 15 percent, is earmarked for on-lending to women-owned SMEs, thereby enhancing credit access for women entrepreneurs.
Additionally, IFC has collaborated with CBC and NDB to establish RSFs amounting to $80 million. This includes $60 million for CBC and $20 million for NDB, with IFC sharing 50 percent of the principal losses incurred by the banks on a portfolio of eligible SME loans. This strategic measure aims to expedite the banks’ commitment to increasing lending to SMEs, including women-owned enterprises and agribusinesses. These facilities are supported by the IDA Private Sector Window Blended Finance Facility through the Small Loan Guarantee Program (SLGP), a program designed to de-risk and upscale financing for SMEs in eligible countries, including Sri Lanka.
Moreover, IFC’s Global Trade Finance Program (GTFP) will provide a $36 million trade finance facility guarantee to NTB and NDB, enhancing their trade finance capabilities. This includes up to $20 million for NTB and $16 million for NDB, aiming to improve the banks’ ability to offer underserved sectors access to global markets and supply chains.
Beyond financing, IFC will provide technical expertise to modernize NDB’s digital transaction banking and supply chain finance systems, directly increasing credit access for underserved SMEs. Planned advisory support also includes a comprehensive upgrade of NDB’s climate risk management framework, integrating climate considerations into the bank’s strategy and operations.
Gevorg Sargsyan, Country Manager for the World Bank Group in Sri Lanka and Maldives, highlighted the importance of these investments, stating, “As Sri Lanka rebuilds following multiple shocks, IFC’s collaboration with leading financial institutions is instrumental in addressing urgent needs while laying the foundation for long-term competitiveness. These investments send a strong signal of confidence to the market.”
These investments build on IFC’s 55-year history in Sri Lanka, and the organization remains a long-term partner and shareholder in the country’s leading financial institutions, holding an equity interest in CBC and maintaining long-standing relationships with NDB and NTB. Recently, IFC also helped strengthen Sri Lanka’s financial infrastructure by launching a Secured Transactions Registry (STR), enabling greater credit access for SMEs.
