ADB, Hatton National Bank Sign $100 Million Infrastructure Loan
COLOMBO, SRI LANKA – The Asian Development Bank (ADB) and Hatton National Bank (HNB) have signed a $100 million loan agreement which will help expand infrastructure development in the country, including in post-conflict areas.
The financing includes a direct ADB loan of up to $75 million and a B-loan from financial institutions of up to $25 million. ADB acts as a lender of record for the B-loans. HNB—the second largest private commercial bank in the country—has financed infrastructure projects since 1975, and is one of the largest lenders in the renewable energy sector. HNB has a long relationship with ADB and is also a member of ADB’s Trade Finance Program.
Sri Lanka’s infrastructure investment needs are estimated at about $4 billion to $7 billion a year, or 4% to 7% of gross domestic product. The Government of Sri Lanka is increasingly looking for international partners to provide long term infrastructure funding to supplement domestic resources. Key sectors requiring support include energy, solid waste management, telecommunications, transport, and water and sanitation.
There is a strong need for long term funds for infrastructure development in Sri Lanka and ADB’s assistance will provide a stable source of long tenor debt that cannot be raised from the market.
“ADB is proud of its partnership with HNB and the loan will fill a much needed gap for long term financing for infrastructure projects in underdeveloped regions in the country,” said Todd Freeland, Director General of ADB’s Private Sector Operations Department.
It will also allow HNB to strengthen its asset-liability profile by extending long term loans. The assistance marks ADB’s first non-sovereign financial sector initiative targeting infrastructure development, in the country.
“The loan will also support the Central Bank of Sri Lanka’s broader reform plan for the financial sector, including boosting the assets of commercial banks,” said Asif Cheema, Investment Specialist in PSOD.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region.