IFC Unveils $166M Financing Push to Power Sri Lanka’s SME-Led Recovery

The International Finance Corporation (IFC) has announced a $166 million high-impact investment program to support Sri Lanka's private sector, signaling renewed confidence in the country's transition from economic stabilization to inclusive, sustainable growth.

The country-level financing package targets small and medium-sized enterprises (SMEs)—the backbone of Sri Lanka's economy—with a strong focus on women-owned businesses and agri-business, two sectors critical for job creation and post-crisis recovery. SMEs account for more than 75 percent of businesses and 45 percent of jobs, yet continue to face severe constraints in accessing credit.

Strategic Capital for the Financial System

The investment is being deployed through three of Sri Lanka's leading private banks—Nations Trust Bank (NTB), Commercial Bank of Ceylon (CBC), and National Development Bank (NDB)—and is structured to both expand lending and reduce risk in a fragile post-crisis environment. The package includes:

• $50 million in loans, including IFC's first debt investment in Sri Lanka's financial sector since the 2022 crisis

• $80 million in Risk-Sharing Facilities (RSFs) to de-risk SME lending

• $36 million in trade finance guarantees to strengthen access to global markets

Of the total financing, 15 percent ($7.5 million) is earmarked specifically for women-owned SMEs, helping address persistent gender gaps in access to finance.

"SMEs are the undisputed backbone of Sri Lanka's economy," said Allen Forlemu, IFC Regional Industry Director for Financial Institutions in Asia and the Pacific. "By helping banks channel capital to women-led businesses, smallholder farmers, and the sectors driving recovery, we are enabling Sri Lanka not just to rebound, but to grow forward with greater resilience and inclusivity."

De-Risking SME Lending at Scale

A key innovation in the program is the use of Risk-Sharing Facilities, under which IFC will absorb 50 percent of potential losses on eligible SME loan portfolios—$60 million with CBC and $20 million with NDB. Backed by the IDA Private Sector Window's Small Loan Guarantee Program, the facilities are designed to unlock lending to SMEs that banks might otherwise consider too risky, including agri-businesses and women-led firms.

In parallel, IFC's Global Trade Finance Program (GTFP) will provide $36 million in guarantees—up to $20 million for NTB and $16 million for NDB—boosting trade finance capacity and enabling underserved businesses to participate in regional and global supply chains.

Digital, Climate, and Advisory Support

Beyond capital, IFC is pairing financing with technical advisory support to modernize Sri Lanka's financial ecosystem. This includes upgrading NDB's digital transaction banking and supply chain finance platforms, directly expanding credit access for SMEs, as well as strengthening the bank's climate risk management framework to integrate climate considerations into strategy and operations.

"As part of our One World Bank Group approach, IFC is unlocking inclusive financing streams and equipping banks with the tools and confidence to extend finance where it is most needed," said Imad Fakhoury, IFC Regional Division Director for South Asia.

A Signal to Markets

The announcement comes as Sri Lanka continues to recover from multiple shocks, including the 2022 economic crisis and recent climate-related disasters.

"These investments send a strong signal of confidence to the market," said Gevorg Sargsyan, World Bank Group Country Manager for Sri Lanka and the Maldives. "Our focus is on sustainable and inclusive growth so that every community can benefit from Sri Lanka's recovery."

The new program builds on IFC's 55-year partnership with Sri Lanka, including equity participation in CBC and long-standing relationships with NDB and NTB. It also follows recent IFC support to strengthen financial infrastructure, such as the launch of a Secured Transactions Registry, which is already improving SME access to credit.

As Sri Lanka looks to move beyond stabilization, the IFC-backed package positions SMEs, women entrepreneurs, and agri-businesses at the center of the country's next growth phase.