More ADB funds for Lanka

A top official of the Asian Development Bank (ADB) said the ADB will facilitate more trade financing in Sri Lanka following the success of transactions held so far.

He said the outcome of all loan disbursements to Sri Lanka has been positive and the bank is keen to fund the country’s post recession trade development initiatives.

ADB Country Director Richard vokes exchanging the agreement with CEO, NDB Bank Eran Wickremaratne. Pic: Sudath Nishantha

He was speaking at a ceremony held in Colombo to sign trade financing agreements with Sri Lankan banks. The agreements were signed with Bank of Ceylon, DFCC Vardhana Bank and the NDB Bank under the ADB’s Trade Finance Facilitation Program (TFFP) launched in 2004.

The TFFP will help companies specially the SME sector to carry out international trade amidst the challenges of the global economic melt down and provide employment to the rural population. Head of Trade Finance ADB, Steve Beck said Sri Lanka’s banks and companies will benefit from more access to foreign trade and banking networks as the country emerges from the conflict that restrained investment and growth for decades.

“There has been 10-15 per cent decline in global trade financing due to concerns of emerging market risks, Basel 11 requirements, counterpart risks and reduced availability of capital among international banks”, he said.

Banks were worried over the steep rise in non performing loans and sharp drop in foreign remittances.The capital allocation for transactions under Basel 11 aggravated the situation.

“Trade is pivotal to promote economic expansion. Stronger economic growth results in more jobs and higher income which in turn helps to reduce poverty”, Beck said.

Resident Mission Head, ADB, Richard Vokes said contingency plans are vital to mitigate risks and emerge from the global crisis.

“A reliable partnership in trade during a crisis is essential. The ADB will be a sheet anchor to foreign banks”, he said. The ADB has been providing finance and guarantees through and in conjunction with developing member country banks to support trade in developing countries under the US$ 1 billion TFFP which was expanded early this year.

The ADB has been one of Sri Lanka’s largest donors and development partners since its inception in mid 1960’s. The bank stepped up operations to make a salient contribution towards the development of the country since setting up its resident mission ten years ago.

LF