MONETABRIEF – Sri Lanka has proposed more subsidized credit programs for several sectors in the 2027 budget amid a high inflation target which trigger high interest rates and destruction of domestic capital.

In 2027, Rs. 67,687 million has been allocated for interest subsidies and refinancing to banks," President Anura Kumara Dissanayake said.

"Through this, it is expected to provide 174 billion rupees as concessionary loans to entrepreneurs through State and private banks.""

Sri Lanka started to have very high nominal interest rates after the central bank started to debase money from the early 1980s, the IMF's Second Amendment to its articles allowed it to escape accountability.

Since 2015, under flexible inflation targeting, an economy that has been stabilized at great cost, has been repeatedly reflated to trigger external crises and eventual external default.

In 2026 the economy was reflated amid a budget surplus, depriving an excuse that macro-economsits used to escape accountability since February 1952.

Housing scheme for migrant workers

A highly concessionary housing loan scheme of up to Rs. 5 million will be implemented to meet the housing needs of migrant workers. Under this scheme, steps will be taken to provide an interest subsidy of 10 percent for up to Rs. 3 million and an interest subsidy of 5 percent for the remaining Rs. 2 million.

It is proposed that, for the first Rs. 3 million, a contribution of 6 percent be borne by the Government and a contribution of 4 percent by the Sri Lanka Bureau of Foreign Employment, and for the remaining Rs. 2 million, a contribution of 3 percent be borne by the Government and a contribution of 2 percent by the Sri Lanka Bureau of Foreign Employment.

It is proposed to allocate a sum of Rs. 1,000 million in 2027 as the Government contribution for the implementation of this interest subsidy scheme.

Home Stay Loan Interest Subsidy

It is proposed to provide concessionary loans of up to a maximum of Rs. 2 million at an annual interest rate of 3 percent to entrepreneurs for businesses operating home-based tourist accommodation, to improve such facilities and to start new home-based tourist accommodation, and it is proposed to allocate Rs. 100 million as the first phase for the payment of the necessary interest subsidies. Steps will be taken to provide the additional provisions required. It is expected to provide concessionary loans amounting to Rs. 7,500 million under this loan scheme.

Loan Interest Subsidy For Boat Makers

It is proposed to provide a maximum loan amount of up to Rs. 500 million through banks at an annual interest rate of 5 percent to large-scale fisheries industrialists with export potential, fish product suppliers, boat manufacturers and manufacturers of other fishing gear required for the fisheries industry, to obtain the modern technology and other inputs they require. It is proposed to provide Rs. 1,000 million as interest subsidies for this purpose.

Through this, it is expected to provide loans amounting to Rs. 15,000 million.

Programme for Empowering Rural Enterprises

With the aim of strengthening enterprises in rural areas and empowering Aswesuma beneficiaries, it is expected to provide loans to entrepreneurs through the Samurdhi Bank up to a maximum of Rs. 5 million at a concessionary annual interest rate of 4 percent.

In order to qualify for this loan facility, it is mandatory for such entrepreneurs to provide employment opportunities to at least five Aswesuma beneficiaries. It is proposed to allocate Rs. 200 million for interest subsidies for this purpose. Through this, it is expected to provide loans amounting to Rs. 5,000 million.

Pledge Loan Scheme for Small and Medium-Scale Paddy Mill Owners

It is proposed to implement the Pledge Loan Scheme for small and mediumscale paddy mill owners for the purchase of paddy at the Government guaranteed price as an interest-free loan scheme from 2027.

It is expected to provide financial facilities of Rs. 20,000 million through this programme. In addition to the Rs. 350 million currently allocated, further allocations are proposed to bear the additional interest subsidy of this loan scheme.

Loan Scheme for Uplifting Women-headed Families

A special programme is essential for uplifting women-headed family units.

In particular, the living standards of such families living in rural areas are at a relatively low level. In order to strengthen such families economically, it is proposed to implement a group loan scheme of up to Rs. 1 million at a concessionary annual interest rate of 3 percent through the Samurdhi Bank.

Refinance and Interest Subsidy Loan Scheme for Reviving the Micro, Small and Medium Enterprise Sector (Re-MSME Plus)

The Government will provide an interest subsidy for the granting of a further Rs. 20,000 million in loans, in addition to the Rs. 30,000 million currently allocated to provide concessionary loans at an interest rate of 5 percent for the capital and working capital requirements of Micro, Small and Medium Enterprises under the Refinance Loan Scheme.

It is also proposed to allocate Rs. 200 million for this purpose as the first phase. Steps will be taken to provide the additional provisions required.

In order to make the fisheries sector eligible for this concessionary loan scheme, it is proposed to grant loans to enterprises engaged in the fisheriesindustry by considering only the business turnover in the definition of Micro, Small and Medium Enterprises. (Colombo/Nov13/2026)