Announcement of IDA Credit for Small and Medium Industrial Development in Sri Lanka on October 15, 1981

- t) ... ~OR IMMEDI~TE REL e·WorldBank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 IDA NEWS RELEASE NO. 82/11 October 15, 1981 IDA CREDIT FOR SMALL AND MEDIUM INDUSTRIAL DEVELOPMENT IN SRI LANKA Expansion of small and medium-size industrial enterprises in Sri Lanka will be assisted by an SDR 26.7 million ($30 million) credit from the lnter- -ational Development Association (IDA), a concessional lending affiliate: of the World Bank. In recent years, small and medium-size flrms in Sri Lanka have sharply increased their demand for longer term loans (over three years). Their main activities are agroindustries, light engineering, construction materials, and rubber products and textiles. As a major source of finance for these firms, the National Development Bank reviews and refinances loans made by four local commercial banks and a national development finance company. This lending program already has been aided by an IDA credit of $16 million, which also included technical and marketing • services in the major product groups. Full commitment of the lending component is expected in October 1981, one year ahead of schedule. The new IDA credit will: a) expand and strengthen term lending operations of the banks, with refinance by the National Development Bank; b) increase emphasis on exports and related supply development, supporting the Export Develop- ment Board's progr3ms in private sector export expansion and related supply development in promising light industrial product groups; and c) strengthen technical and management services to smaller firms, tapping knowhow in the private sector. The $52.50 million project is expected to provide term credit to over 2,000 new and existing enterprises and to create about 23,000 new jobs. The iDA credit of SDR 26.7 million to Sri Lanka is for 50 years, including 10 years of grace; it will be interest-free but will carry a service charge of 3/4 of 1% a year to cover IDA administrative costs. The credit will be committed when funds are available. NOTE: IOA credits are denominated in SDRs (Special Drawing Rights), which are valued on the basis of a "basket" of currencies. The U.S. dollar equivalent of the SDR amount of the IDA credit reflects the exchange • rates existing at the time of negotiation of the credit .