South Asia

Sum of Measures 1—5 (Total Package)

Total Package in USD Million: 1,697
% of GDP (2019): 2.03%
% of Regional Total Package: 0.46%
Package Per Capita in USD: 78.30
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: April, State-owned financial institutions will invest in treasury bonds and bills to stabilize the money market interest rate at 7%.

01B - Support policies for short-term lending info_outline

No amount/estimate: (i) March 16, 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%; (ii) May 5, The liquidity coverage ratio and net stable funding ratios have been reduced to 90%; (iii) 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% [update].

01C - Forex operations info_outline

No amount/estimate: (vi) 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 (a) suspension of motor vehicle importation, (b) suspension of importation of nonessential goods, and (c) suspension of the purchase of Sri Lanka international sovereign bonds; (vii) April, Inward remittances will be exempted from certain regulations and taxes.

02 - Credit creation info_outline LKR297,900,000,000 USD1,609,777,069
02A - Financial sector lending/funding info_outline LKR297,900,000,000 USD1,609,777,069

(i) 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); June 24: (i) The CBSL and the Government of Sri Lanka launched a novel refinance facility under the Saubagya (Prosperity) Loan Scheme, named Saubagya Covid-19 Renaissance Facility. The bank has approved 13,861 loan applications under Phase-I of this Scheme, totaling LKR27.9 billion. These loans carry a concessional interest rate of 4% per annum with a grace period of 6-months and a repayment period of 24-months [update]; (ii) Further, the Central Bank stands ready to provide further LKR120 billion at a concessionary rate of 1% per annum to commercial banks for on-lending to the affected businesses at a concessionary rate of 4% per annum under Phase-II of the Scheme [update].

02B - Support policies for long-term lending info_outline

No amount/estimate: April 16: (i) The CBSL has reduced monetary policy rates by 50 basis points since March; (ii) 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%; (iii) Lower capital conservation buffer requirements and a relaxation of loan classification rules have been announced; (iv) 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% [update].

02C - Loan guarantees

No amount/estimate: June 16/18, 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 [update].

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

No amount/estimate: April: (i) The President has announced a wide-ranging debt repayment moratorium, which includes a 6-month moratorium on bank loans for the tourism, garment, plantation and IT sectors, related logistics providers, and small and medium industries, with reduced rate working capital loans and investment-purpose loans for these sectors; (ii) There will also be a 6-month moratorium on leasing loans for three-wheelers, and a 3-month moratorium on small-value personal banking and leasing loans; (iii) The interest rate on credit cards will be capped, for transactions up to a certain amount, with a reduction in the minimum monthly repayment; (iv) Financial institutions are also requested to reschedule nonperforming loans.

04 - Equity support info_outline
05 - Government support to income/revenue LKR16,112,144,901 USD87,066,000
05A - Health LKR16,112,144,901 USD87,066,000

(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; April: (ii) The government has allocated up to 0.1% of GDP for quarantine and other containment measures; (iii) The President has also established a special fund for containment and mitigation, inviting local and foreign tax-free donations.

05B - Non-health

No amount/estimate: (i) March 24, CBSL issued a circular to all financial institutions to provide relief measures to assist businesses and individuals, which include a debt moratorium on capital and interest, capping of interest rates charged on credit card payments, reduction of minimum monthly payment dues on credit cards, and extension of the validity of checks; April: (ii) The 2020 first quarter payment deadlines for income tax, value-added tax, and certain other taxes have been extended until end-April; (iii) Other measures announced include tax exemptions for imported masks and disinfectant, and price ceilings on essential food items, as well as food allowances for the poor; (iv) The President has also established a Task Force on Economic Revival and Poverty Eradication and a special fund for social welfare spending, inviting local and foreign tax-free donations.

06 - Budget reallocation info_outline
07 - Central bank financing government
07A - Direct lending & reserve drawdown
07B - Secondary purchase: government securities
08 - International Assistance Received LKR59,913,950,717 USD323,760,000
08A - Swaps info_outline

(i) April 15, Approval was obtained to enter into a Bilateral Currency Swap Agreement with the Reserve Bank of India for USD400 million [update]; (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.

08B - International loans/grants LKR59,913,950,717 USD323,760,000
08B1 - Asian Development Bank LKR30,360,398,921 USD164,060,000

(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 [update]; (v) As of June 19, USD127.53 million (Regular OCR) and USD94.28 million (Cofinanced) - Trade Finance Program (Guarantee) [update]; (vi) As of June 8, USD17.3 million (Regular OCR) and USD12.61 million (Cofinanced) - Trade Finance Program (Loan); (vii) May 20, USD0.17 million TASF - Regional Support to Address Outbreak of Coronavirus Disease 2019 and Strengthen Health Systems Preparedness for Communicable Diseases in South Asia; (viii) June 1, USD0.01 million TASF - REG: Evidence-Based and Strategic Country Knowledge Support (Additional Financing) [update]; (ix) June 2, USD3 million COVID-19 Emergency Response under the Asia Pacific Disaster Response Fund.

08B2 - Other LKR29,553,551,796 USD159,700,000

(i) 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; (ii) April, USD1 million UN COVID-19 Response & Recovery Fund from the UNDP; (iii) 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; (iv) 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.

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) [update].

11 - Other Economic Measures

(i) In late April, import duties on gasoline and diesel were increased to mitigate weak revenue collections; (ii) May 22, Sri Lanka lifts import bans except for vehicles in COVID-19 economic recovery plan; (iii) 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.

12 - Non-Economic Measures

(i) March 16, the authorities have closed schools and public offices with limited exceptions for banking and retail activity, while nonessential workers have been required to work from home; (ii) 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 [update]; (iii) March 23, The Colombo Stock Exchange was closed.