The European Investment Bank (EIB) is providing a EUR 70 million loan to the Democratic Socialist Republic of Sri Lanka to establish a dedicated credit line for financing small and medium-sized private sector projects in industry, tourism and other sectors affected by the Tsunami disaster.
In order to support the reconstruction process in the private sector the EIB funds will finance up to 75% of the total investment of each project. DFCC Bank will be the administrative unit of the scheme, channeling the funds in local currency and monitoring the allocations to be made by the eight participating financial institutions to business clients implementing their reconstruction projects.
The long-term funding offered by the EIB is scarce in the local financial market. By focusing on the private's sector reconstruction efforts a renewed drive for investment is expected to enhance employment creation and indirectly reduce poverty ad improve human welfare.
The eight participating financial institutions, which have been selected on the basis of their financial soundness and their ability to perform effectively and efficiently, will allow to well cover in short time a very broad coastal region affected directly and indirectly by the tidal wave.