Sri Lanka will obtain USD 75 million (approx. Rs. 11,400 million) from International Development Association (IDA) of the World Bank to implement the Financial Sector Modernization Project.
The development objective of the proposed project is “to contribute to increasing financial market efficiency and use of financial services among micro, small and medium enterprises and individuals”.
This objective will be achieved through modernizing financial market infrastructure, upgrading the legal and regulatory framework for the financial system and strengthening the institutional capacity of the financial sector regulators i.e. Central Bank of Sri Lanka (CBSL), Securities and Exchange Commission of Sri Lanka (SEC), Insurance Board of Sri Lanka (IBSL).
The project direct beneficiaries are the financial sector regulators (CBSL, SEC and IBSL) and indirect beneficiaries will be financial firms, micro, small and medium enterprises and individuals and will be implemented by CBSL, SEC and IBSL under the policy directives of Ministry of Finance and Mass Media and Ministry of National Policies and Economic Affairs.
The project consists of the components Support Selected mid – level reforms through results – based financing, Strengthening the financial sector Regulator’s institutional capacity, upgrading the legal and regulatory framework and modernizing financial market infrastructure, Project implementation and monitoring.
A high – level Project Steering Committee will be established including members from Ministry of Finance and Mass Media, Ministry of National Policies and Economic Affairs, CBSL, SEC and IBSL.
The financing agreement of the aforementioned project was signed by Dr. R.H.S. Samarathunga, Secretary, Ministry of Finance and Mass Media on behalf of the Government of Sri Lanka and Ms. Idah Z Pswarayi – Riddihough, World Bank Country Director for Sri Lanka and Maldives on behalf of the World Bank at the Ministry of Finance.
In addition to the financing agreement, subsidiary agreements were also signed between the Government and three regulators and project agreements were signed between the World Bank and the three regulators, namely Central Bank of Sri Lanka, Securities and Exchange Commission of Sri Lanka and the Insurance Board of Sri Lanka.