South Asia

Sum of Measures 1—5 (Total Package)

Total Package in USD Million: 1,034.68
% of GDP (2019): 1.24%
% of Regional Total Package: 0.26%
Package Per Capita in USD: 47.75
Note: Measures 9 and 10 are added to the sum of Measures 1-5.
Measure Amount (Local) Amount (USD) Details Update Source
01 - Liquidity Support info_outline
01A - Short-term lending info_outline

No amount/estimate: (i) April, State-owned financial institutions will invest in treasury bonds and bills to stabilize the money market interest rate at 7%; (ii) May 13, Enable licensed banks to avail of liquidity through the Sri Lanka Deposit Insurance and Liquidity Support Scheme or as loans and advances in rupees under the Framework of Emergency Loans and Advances to Licensed Banks, based on acceptable collateral and liquidity forecasts.

01B - Support policies for short-term lending info_outline

No amount/estimate: (i) March 17, The required reserve ratio on domestic currency deposits of commercial banks has also been lowered by 1 percentage point to ease liquidity conditions from 5% to 4%; June 16, The Central Bank of Sri Lanka (CBSL) decided to reduce the Statutory Reserve Ratio (SRR) applicable on all rupee deposit liabilities of licensed commercial banks (LCBs) by 2 percentage points from 4% to 2%; On July 9, The SRR was maintained at 2%; Likewise, on August 20, The SRR was kept at 2%; (ii) April 16, Lowered the minimum daily reserve requirement for licensed commercial banks to 20% from 90% to ease overnight liquidity needs; (iii) May 13, The liquidity coverage ratio and net stable funding ratios have been reduced to 90%.

01C - Forex operations info_outline

No amount/estimate: (i) March 19, The CBSL introduced the following measures for licensed commercial banks to adopt for a period of 3 months to ease the pressure on the exchange rate. These include suspending the facilitation of motor vehicle importation until July 19. It also includes suspension of importation of nonessential goods, which was extended indefinitely on June 30. The purchase of Sri Lanka international sovereign bonds (ISBs) was also suspended. On June 19, Banks were allowed to purchase ISBs, provided it is funded with new foreign currency inflows to the banks; (ii) April, Inward remittances will be exempted from certain regulations and taxes; (iii) April 2, Restrictions on capital outflows through suspension of investment-related remittances; On June 25, this was extended for another 6 months from July 2.

02 - Credit creation info_outline LKR150,000,000,000 USD810,562,472
02A - Financial sector lending/funding info_outline LKR150,000,000,000 USD810,562,472

No amount/estimate: (i) March 24, The 2.4 million beneficiaries of the Samurdhi program can avail interest-free loans of up to LKR10,000 with a 6-month grace period and 18 months repayment period through all Samurdhi banks; March 31: (ii) A 4% working capital loan for two years (with 6-month debt moratorium) under the scheme “Saubagya COVID-19 renaissance facility” for MSMEs in all the sectors, and large enterprises in the affected sectors (such as tourism) was introduced through a LKR50 billion re-financing facility by the Central Bank. On August 19, CBSL extended the deadline of application for the 4% working capital loan scheme until September 30. Under this scheme, the Central Bank provides 100% refinancing to participating licensed banks at an interest rate of 1%; (iii) No amount/estimate: Investment purpose rupee loan facility for five years at an interest rate equal to maximum of average weighted prime lending rate plus 1.5% may be obtained only by performing borrowers from a bank, with the amount not exceeding LKR300 million per bank per borrower, to expand business activities; (iv) June 16, The Central Bank implemented new Credit Schemes to support the revival of economic activity to support lending to business segments affected by COVID-19 (construction and other needy sectors) at the concessional rate of 4% per annum. This scheme along with the existing refinance Scheme will provide LKR150 billion in total to the businesses affected by the COVID-19 pandemic (See other details in Measure 10).

02B - Support policies for long-term lending info_outline

No amount/estimate: (i) March 30, Defer the requirement to enhance capital by banks which are yet to meet the requirement by end 2020, until end 2022; (ii) March 31, Licensed banks, finance, and leasing companies have been permitted, if required, to reclassify NPLs under the debt moratorium scheme as performing loans; April 16: (iii) The CBSL has reduced monetary policy rates by 50 basis points since March; (iv) The rate at which CBSL grants advances to commercial banks for temporary liquidity needs has been lowered by 500 basis points from 15% to 10%; (v) Lower capital conservation buffer requirements and a relaxation of loan classification rules have been announced; (vi) May 6, The CBSL has reduced monetary policy rates by 100 basis points since March from 6.5% to 5.5% for the Standing Deposit Facility Rate and from 7.5% to 6.5% for the Standing Lending Facility Rate. The bank rate was also reduced by 50 basis points from 10% to 9.5%; July 9, The CBSL has reduced monetary policy rates by 100 basis points from 5.5% to 4.5% for the Standing Deposit Facility Rate, from 6.5% to 5.5% for the Standing Lending Facility Rate, and the bank rate from 9.5% to 8.5%; (vii) May 13, The Monetary Board, has decided to restrict certain discretionary payments of licensed banks, such as declaring cash dividends or repatriation of profits, engaging in share buy backs, increasing management allowances and payments to the Board of Directors for a limited period until 31 December 2020; (viii) August 20, The CBSL has decided to maintain rates at their current levels. Measures to promote lending were also introduced. The Board decided to revise downward the caps on interest rates on credit cards from 28% to 18% per annum, on pre-arranged temporary overdrafts to 16% per annum, and on pawning facilities to 10% per annum from an earlier imposed maximum interest rate of 12% on April 27. Penal interest rates were capped at 2 percentage points over the regular interest rates charged on the relevant credit facility.

02C - Loan guarantees

No amount/estimate: (i) June 16, The government and the Monetary Board of the Central Bank of Sri Lanka (CBSL) provided construction sector enterprises with a facility to borrow from licensed commercial banks (LCBs), using guarantees issued by the government equivalent to the amount due on account of contracts carried out in the past, made available at the concessionary rate of 1% per annum, for a period of 180 days; (ii) June 26, In parallel to the LKR150 billion facility, a credit guarantee scheme will be launched on 1 July 2020. Through this scheme, CBSL will provide a credit guarantee to banks, ranging from 80% for smaller loans to 50% for relatively large loans to provide loans at an interest rate of 4% using the banks own funds.

03 - Direct long-term lending info_outline
03A - Long-term lending info_outline

No amount/estimate: (i) April 30, A new concessionary loan scheme titled ‘Aswenna’ will be introduced in May 2020 which will provide farmers with loans of up to LKR3 million; June 11: (ii) Under the post COVID-19 relief budget of the government, a 4% interest 5-year loan with a two-year grace period will be available for accommodation providers and destination management companies registered under Sri Lanka Tourism Development Association (SLTDA) to pay salaries of staff; (iii) A similar loan facility will also be available for establishments providing facilities to tourists registered under SLTDA including, restaurants, tourist friendly eating places, spa and wellness centers, spice gardens, tourist shops, and water sports centers, where state-owned Bank of Ceylon will directly remit a maximum of LKR15,000 per employee for up to 6 months.

03B - Forbearance

No amount/estimate: (i) March, Wide-ranging debt moratoriums have been introduced by licensed banks, finance and leasing companies based on a directive by the Central Bank of Sri Lanka (CBSL) on 24 and 31 March 2020. These include (a) six-month moratorium (until end-September 2020) on both rupee and foreign currency term loans for affected businesses in SMEs, tourism, apparel, plantation, IT and related logistical services; and a three-month moratorium (until end-June 2020) on small-value personal banking loans and leasing for amounts less than LKR1 million; (b) licensed banks, finance and leasing companies have been requested to reschedule non-performing loans until end-September 2020; (c) licensed banks, finance, and leasing companies have been permitted, if required, to reclassify NPLs under the debt moratorium scheme above as performing loans; (d) temporary suspension of recovery actions under the debt moratorium scheme; (e) interest rate on credit cards capped at 15% for up to LKR50,000; the minimum monthly payment on the cards reduced by 50%; and repayment of all credit cards below the limit of LKR50,000 was extended until 30 April 2020; (ii) August 26, CBSL requested licensed commercial banks to extend the debt moratorium to COVID-19 affected businesses and individuals in the tourism sector for another six months from 1 October 2020 to 31 March 2021.

04 - Equity support info_outline
05 - Government support to income/revenue LKR41,473,926,000 USD224,114,720
05A - Health LKR2,845,151,000 USD15,374,484

(i) March 23, President Gotabaya Rajapaksa has pledged USD5 million (0.01% of GDP) to the South Asian Association for Regional Cooperation (SAARC) COVID-19 Emergency Fund; (ii) No amount/estimate: Steps were taken to increase the health system capacity; the government scaled up testing services; (ii) LKR100 million from the Presidential fund was used to establish a special fund for containment, mitigation and social welfare spending, inviting local and foreign tax-free donations. The primary focus of the fund is facilitating the containment of COVID-19 including, purchasing medication, medical equipment and capacity expansion; (iii) June 30, The government has allocated up to LKR1.2 billion (0.01% of GDP) for preventive measures.

05B - Non-health LKR38,628,775,000 USD208,740,236

No amount/estimate: (i) March 17, Tax exemptions on the importation and supply of masks, disinfectant, machinery and equipment including medical, surgical, and dental instruments, and price ceilings on essential food item such as lentils, eggs and canned fish; (ii) March 24, The 2.4 million beneficiaries of the Samurdhi program will also receive food stamps for essential food items on a weekly basis; March 30: (iii) Two rounds of monthly cash transfers to poor and vulnerable households totaling around 0.25% of GDP was made in April and May; No amount/estimate: (iv) Payment of electricity and water utility bills (both electricity and water utility operators are state-owned entities) that are below LKR15,000 were extended until end April 2020; June 4: (v) No late payment charges will be imposed on income taxes up until 30 June 2020; (vi) June 25, Tax relief measures to SMEs in the form of wavering of income tax arrears on assessments issued up to the year of assessment 2018/19, non-issuance of additional assessments for the year 2019/20, granting grace period to settle taxes in arrears/default, extension on seizure notices, and extension of the dates for the payment of taxes and filing of tax returns; On July 3, Submission of various tax returns/statements was extended until Dec 31; (vii) June 26, Together with the credit gurantee, an interest subsidy scheme will be launched on 1 July 2020. CBSL will provide a 5% interest subsidy to cover the cost of funds of banks; (viii) July 15, Consumers were provided relief for electricity bills during the months of March to May, charging the lower February bill for these months, with a grace period of 2 months to settle the bill; the power supply disconnection normally done for late payments has also been temporarily suspended; (ix) September 2, The Cabinet approved the allocation, from the General Treasury, of essential recurrent expenditures of government media institutions for a period of 4 months from September to December [update]; (x) September 8, The President removed the 14% income tax imposed on profits earned by gem and jewelry manufacturers and the 15% tax on gold imports to support the industry [update].

06 - Budget reallocation info_outline
07 - Central bank financing government
07A - Direct lending & reserve drawdown
07B - Secondary purchase: government securities
08 - International Assistance Received LKR436,594,972,290 USD2,359,250,000
08A - Swaps info_outline LKR259,079,352,000 USD1,400,000,000

(i) April 15, Approval was obtained by Sri Lanka to enter into a Bilateral Currency Swap Agreement with the Reserve Bank of India (RBI) for USD400 million; On July 24, CBSL and RBI entered a USD400 million swap under the Framework on Currency Swap Arrangement for SAARC countries; (ii) May 24, Sri Lankan President Gotabaya Rajapaksa has requested India to provide a special USD1.1 billion currency swap facility to boost the country's draining foreign exchange reserves in view of the economic slowdown due to the coronavirus pandemic. This is on top of the USD400 million foreign exchange swap with the Reserve Bank of India that the government sought under the South Asian Association for Regional Cooperation (SAARC) framework; (iii) June 16, Approval was obtained to initiate a repo facility for USD1 billion from the Federal Reserve Bank of New York to meet the contingent liquidity needs of the government.

08B - International loans/grants LKR177,515,620,290 USD959,250,000
08B1 - Asian Development Bank LKR43,682,629,314 USD236,050,000

(i) March 12, USD0.6 million grant for Health Systems Enhancement Project under ADF; (ii) April, USD1 million - TA9950-REG: Regional Support to Address the Outbreak of Coronavirus Disease 2019 and Potential Outbreaks of Other Communicable Diseases; (iii) April 7, USD0.05 million TASF - Regional Project Development Support for the South Asia Subregional Economic Cooperation Operational Plan, 2016–2025; (iv) April 10, USD14.4 million (USD10 million loan and USD4.4 grant) for Health Systems Enhancement Project; (v) As of July 31, USD189.09 million [update] (Regular OCR) and USD221.60 million [update] (Cofinanced) - Trade Finance Program (Guarantee); (vi) As of July 31, USD26.8 million [update] (Regular OCR) and USD18.14 million [update] (Cofinanced) - Trade Finance Program (Loan); (vii) May 20, USD0.21 million TASF - Regional Support to Address Outbreak of Coronavirus Disease 2019 and Strengthen Health Systems Preparedness for Communicable Diseases in South Asia; (viii) June 2, USD3 million COVID-19 Emergency Response under the Asia Pacific Disaster Response Fund; (ix) June 29, USD0.50 million TASF - Planning for Economic Recovery of South Asia from COVID-19; (x) July 21, USD0.20 million [update] (OCR) Railway Efficiency Improvement Project; (xi) July 24, USD0.07 million (TASF) Due Diligence and Capacity Development of Trade Finance Program Banks (Subproject 3); (xii) No amount/estimate: September 2, USD0.33 million (Cofinanced) Challenges and Opportunities of Population Aging in Asia [update]; (xiii) September 4, USD0.13 million TASF - Enhancing Gender Quality Results of South Asia COVID-19 Response [update].

08B2 - Other LKR133,832,990,976 USD723,200,000

(i) March 19, China Development Bank has provided a concessionary loan of USD500 million with a term of 10 years, to help Sri Lanka to better respond to the COVID-19 pandemic; (ii) April 2, The World Bank’s Board of Executive Directors today approved the USD128.6 million Sri Lanka COVID-19 Emergency Response and Health Systems Preparedness Project to help the country prevent, detect, and respond to the COVID-19 pandemic and strengthen its public health preparedness; (iii) April, USD1 million UN COVID-19 Response & Recovery Fund from the UNDP; (iv) May, More than USD5.8 million in total assistance from USAID includes USD2 million in ESF to increase social services for areas and populations most affected by the COVID-19 crisis, address the specific threats to social cohesion, and mitigate negative economic impacts; USD2 million in additional ESF for strengthening small and medium-sized enterprises and increasing women’s economic participation; and USD1.3 million in health assistance to help the Sri Lankan Government prepare laboratory systems, activate case-finding and event-based surveillance, support technical experts for response and preparedness, conduct risk-communications, prevent and control infectious diseases in health facilities, and more. Finally, USD0.59 million in MRA humanitarian assistance will support vulnerable people during the pandemic; (v) April 9, The European Union provides EUR22 million (USD24.3 million; EUR0.904/$1) grant to Sri Lanka. This includes (a) EUR2 million for health, for equipment and medical supplies to be procured by the World Health Organisation and to strengthen laboratory networks in the country; (b) EUR16.5 million for the agricultural sector; and (c) EUR3.5 million for the tourism industry, in particular the smaller operators and their employees; (vi) July 8, The Government of Japan has provided a total sum of JPY800 million, approximately LKR1,400 million or USD7.5 million (JPY107.293/$1) to the Government of Sri Lanka to strengthen the health sector to tackle COVID-19 through the provision of medical equipment; (vii) September 11, The World Bank has reallocated USD56 million from ongoing projects in Sri Lanka to protect the most vulnerable in the agriculture sector, improve COVID-19 protection measures on public transport, facilitate tele-education for school children, and provide digital solutions to improve delivery of public services [update].

09 - International Assistance Provided
09A - Swaps info_outline
09B - International loans/grants
10 - No breakdown

March 27, The CBSL has decided to set up a LKR50 billion Re-financing Facility in order to implement the decisions taken by the Cabinet of Ministers on 20 March to introduce a wide range of fiscal and financial concessions for COVID-19 hit business activities including self-employment businesses and individuals. Among these concessions are debt moratorium (capital and interest) and a working capital loan at the interest rate of 4% per annum for eligible customers to be repaid in 2 years (Amount included in Measure 2A).

11 - Other Economic Measures

(i) April 23, import duties on petrol and diesel were increased to mitigate weak revenue collections, but this was reversed in late June; (ii) May 22, Sri Lanka lifts import bans except for vehicles in COVID-19 economic recovery plan.

12 - Non-Economic Measures

(i) March 11, suspension of visa on arrival for tourists; (ii) March 13, schools and universities closed until April 20; (iii) March 19, government declared a work-from-home arrangement for the public and private sectors, which was extended until April 20; (iv) March 20, The authorities suspended all arriving international flights and ships, while imposing a strict nation-wide curfew, which was gradually eased on May 11, and was fully relaxed on June 6; barring large public gatherings; (v) March 22, All inbound passenger flights and passenger ships suspended, excluding repatriations; (vi) March 23, An island-wide curfew was imposed; (vii) March 26, essential services, including central bank, commercial banks, insurance services, and treasury, remained open; (viii) April 20, All forms of functions, pilgrimages and pleasure tours, carnivals, processions and meetings continued to be banned; (ix) June 29, Night-time curfew removed across the island. Gatherings continue to be subject to public health guidelines. Use of masks in public remains mandatory. All schools to reopen under five stages from June 29 to August 10; (x) August 10, Local schools have been allowed to reopen in several phases so as to prevent overcrowding within confined spaces. Accordingly certain days of the week have been reserved for particular grades and students to attend school.