IFC commits US$ 166mn to Sri Lanka to boost SME lending, trade finance

Allen Forlemu

Gevorg Sargsyan

• The financing targets small and medium-sized enterprises (SMEs), with a particular focus on women-owned businesses and agri-based firms
• The package comprises a US$ 50mn loan, US$ 80mn in risk-sharing facilities (RSFs) and US$ 36mn in trade finance guarantees

The International Finance Corporation (IFC) has announced a US$166 million investment package aimed at strengthening Sri Lanka’s private sector-led recovery, signalling renewed confidence in the country’s financial system as it shifts from macroeconomic stabilisation to longer-term growth.

The financing, channelled through Nations Trust Bank (NTB), Commercial Bank of Ceylon (CBC) and National Development Bank (NDB), targets small and medium-sized enterprises (SMEs), with a particular focus on women-owned businesses and agri-based firms, sectors seen as critical for job creation and inclusive growth.

The package comprises a US$50 million loan, US$ 80 million in risk-sharing facilities (RSFs) and US$ 36 million in trade finance guarantees. 

IFC said the investments are designed to ease persistent credit constraints facing SMEs, which account for more than 75 percent of businesses and about 45 percent of employment in Sri Lanka.

“SMEs are the undisputed backbone of Sri Lanka’s economy, and their growth is essential for creating jobs,” said IFC Regional Industry Director for Financial Institutions in Asia and the Pacific, Allen Forlemu. 

He noted that IFC plays a counter-cyclical role during periods of stress, stepping in when private capital retreats, to help economies recover with greater resilience and inclusivity.

The US$ 50 million loan to NTB marks IFC’s first debt investment in Sri Lanka’s financial sector since the 2022 economic crisis. Of this amount, 15 percent, or US$ 7.5 million, has been earmarked for on-lending to women-owned SMEs, addressing long-standing gender gaps in access to finance.

Under the RSFs, IFC will share 50 percent of potential losses on eligible SME loan portfolios, providing up to US$ 60 million for CBC and US$ 20 million for NDB. The facilities are supported by the International Development Association’s Private Sector Window through the Small Loan Guarantee Programme, aimed at de-risking SME lending in eligible countries.

In parallel, IFC’s Global Trade Finance Programme will extend US$ 36 million in guarantees, up to US$ 20 million for NTB and US$ 16 million for NDB—to strengthen trade finance capacity and help underserved firms integrate into global supply chains.

Beyond capital, IFC will provide advisory support to NDB, including the modernisation of digital transaction banking and supply-chain finance systems, and upgrades to the bank’s climate risk management framework.

“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,” said World Bank Group Country Manager for Sri Lanka and the Maldives Gevorg Sargsyan, adding that the investments send a strong signal of confidence to the market.

The latest financing builds on IFC’s 55-year engagement in Sri Lanka. The institution is a shareholder in Commercial Bank of Ceylon and has long-standing partnerships with NTB and NDB.

More recently, IFC has supported improvements to the country’s financial infrastructure, including the launch of a Secured Transactions Registry to expand SME access to credit.