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| Sunday, 29 December 2002 |
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DFCC to lend EIB funds to private sector European The European Investment Bank (EIB) has provided a Euro 40 million credit facility (approximately Rs3.9 billion) to facilitate long term investment capital for private sector enterprises in Sri Lanka. This is the first time such a facility is being extended to Sri Lanka by the EIB. The funds will be disbursed through the DFCC Bank. The total costs of projects proposed for financing under this scheme should be at least Rs 15 million.The bank will provide loans upto 50 percent of the cost of the eligible projects under the credit line while the balance funds may come as equity from promoters as well as debt capital from other sources. The credit line is offered with variable or fixed interest rate options and in both instances the maximum margin charged by EIB is only 40 basis points above the EIB's cost of borrowings from the international markets. The credit is repayable in 15 years with a grace period of 4 years. The agreements relating to the credit line was signed by K.N,. Choksy Minsiter of Finance, Philippe Maystadt President of the EIB and Nihal Fonseka General Manager DFCC Bank. DFCC will utilise the funds to finance the medium and long term projects of the private sector companies in the sectors of manufacturing, agro industry, tourism, infrastructure, mineral processing and services. The credit line will support invetsments undertaken by Sri Lankan subsidiaries and joint venture companies of European Union based companies.Projects involving a high content of technology transfer and or imports of machinery from EU sources will be eligible for funding on a individual basis while special emphasis will be given to projects aimed at improving or protecting the environment. The EIB operations in Sri Lanka were facilitated by the framework Agreement signed by the Government and the EIB in March last year during President Chandrika Kumaratunge's visit to Brussels. Philippe Maystadt President EIB said the credit line will boost the SMIs to modernise and expand and be competitive to face the global challenges in the future with the availability of long term credit. The loan was described by him as an expression of confidence for the long term viability of the Sri Lankan economy. He was of the view that investor confidence has increased with the commencement of the peace talks between the Government and the LTTE and hoped that Sri Lanka will be able to achieve sustainable and long term peace. He said" we are confident that the credit line will work and if it does as expected it can be followed by other loans through DFCC or other lending institutions." Minister Choksy said that this credit facility breaks new ground between the government and EIB and also Mr Maystadts presence in person gives confidence to us. Nihal Fonseka expressed confidence that the credit line will be fully utilised and said that it will benefit the SMIs as they will get access to foreign currency funding under this scheme. This is the 67th loan of EIB in the Asia and Latin American countries. The EIB is a non profit oriented institution established in 1958 and owned by the member states of the EU. The EIB provides long-term financing for capital invetsmnet projects for both within and outside EU. Outside the EU EIB supports its aid and financial cooperation policies to improve sustainable economic development of non member countries. |
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