Sri Lanka Secures $150M from World Bank for Financial Safety Net Project

The government of Sri Lanka has arranged to secure a loan of USD 150 million from the International Development Association (IDA) of the World Bank Group. This funding is intended to support the Financial Sector Safety Net Strengthening Project.

This initiative aims to bolster the financial sector’s safety net in Sri Lanka, particularly focusing on enhancing the Sri Lanka Deposit Insurance Scheme (SLDIS), overseen by the Central Bank.

Additionally, the project seeks to improve the SLDIS’s financial and institutional capabilities, aligning them with global standards for efficient deposit insurance systems.

The government intends to use the project to increase the SLDIS’s reserves, enabling it to fulfill its responsibilities regarding payouts and bank resolution. This will help maintain public trust in the financial system and enhance the SLDIS’s ability to carry out its legal duties more efficiently and increase public understanding of the scheme.

The Central Bank will oversee the project’s implementation, ensuring alignment with its goals and design.

Mahinda Siriwardana, the Treasury Secretary, and Faris H. Hadad-Zervos, the World Bank’s Country Director for Maldives, Nepal, and Sri Lanka, signed the financing agreement for the project, valued at USD 150 million, on January 31, representing the Sri Lankan government and the IDA, respectively.