Sunday, August 2 2026
Sunday, August 2 2026
MONETABRIEF – Proparco, the private sector arm of the French development financing institution, Agence Française de Développement (AFD), is looking to resume funding Sri Lanka as the island recovers from monetary instability that ended in sovereign default.
Proparco last loaned 60 million dollars in Hatton National Bank in 2020, of which 20 million is left. The Coronavirus crisis and the default next hit the country.
Now Sri Lanka has been upgraded to CCC from default by rating agencies, giving an opportunity for Proparco to come back.
"We are looking at opportunities with banks, Sri Lankan banks, with several development finance institutions," says Vincent Vandenbussche, acting regional director for South Asia.
"I think it's good timing for Proparco to be here."
"I think that the political landscape earlier, the different crises, like political crises, economic crises and as well climate crises, did not offer the best conditions for investors to, even for GFIs, to start looking and to reinvest in the country."
"But the good sign is that at the end of 2025, the rating agencies have upgraded the sovereign risk to a CC plus rating, which is a sign for foreign investors that the situation is improving. Unfortunately, from that date, the conflict between the US and Iran has come.
Authorities had since raised interest rates to protect the currency by curbing excess credit, which Vandenbussche said was a "smart" move.
At the moment, Proparco has no firm plans to lend directly to firms with rupee revenue, due to the currency depreciation, but there could be possibilities to lend to projects with dollar denominated revenues.
Proparco has the same broad mandate as the overall AFD group.
One is reducing inequality including gender inequality by supporting women led micro and small businesses. The second is agribusiness.
"And the third one will be to help decarbonise the country. I think that's something which is very important for us," Vandenbussche said.
If credible foreign firms are investing in renewables it will be a plus.
Battery Energy Storage Systems (BESS) are also of interest to Proparco, especially as they have been dollar denominated tariff in Sri Lanka. (Ends)
| US Dollar | 340.98 | Sell - |
| Euro | 391.44 | Sell - |
| Japan Yen | 2.114 | Sell - |
| Sterling | 458.31 | Sell - |
| AED | 91.58 | Indi - |
| 3 month bill | 9.95 | 0.18 ▼ |
| 12-m bill | 10.20% | 0 - |
| Gold | $4035 | - - |
| ASPI | 21,229.14 | 41.9 ▲ |
Comments
Be the first person to comment and join the debate