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Sri Lankan Economy

Budget proposes Rs.174 billion in concessionary credit, with separate subsidy funding

2026-11-15

Illustrative handloom equipment, not a recipient of an approved Budget loan.

Sri Lanka's 2027 Budget proposes Rs.67.687 billion for interest subsidies and bank refinancing, intended to support Rs.174 billion in concessionary loans through state and private banks. The two amounts are not the same type of spending: one is public support for the financing mechanism, while the other is the loan volume the government expects that support to enable.

Under Re-MSME Plus, the government proposes support for a further Rs.20 billion in loans in addition to the Rs.30 billion already allocated for micro, small and medium enterprises' capital and working-capital needs at 5 percent interest. An initial Rs.200 million is proposed for the subsidy, with further provisions to follow as required. Fisheries enterprises would be assessed for eligibility using turnover alone within the MSME definition.

Different schemes carry different limits and conditions

A proposed home-stay scheme would offer up to Rs.2 million per borrower at 3 percent annual interest to improve or start home-based tourist accommodation. The first subsidy allocation is Rs.100 million, supporting an expected Rs.7.5 billion in loans. A separate fisheries scheme proposes loans up to Rs.500 million at 5 percent annually for eligible large enterprises, with Rs.1 billion in subsidies intended to support Rs.15 billion in lending.

The Budget also proposes up to Rs.5 million in housing loans for migrant workers. Its stated 10 percent subsidy on the first Rs.3 million and 5 percent subsidy on the remaining Rs.2 million describe government and foreign-employment-bureau support, not a declaration that borrowers will pay those annual interest rates. The government contribution proposed for 2027 is Rs.1 billion.

These are Budget proposals and expected lending volumes, not confirmation that every scheme is already accepting applications or that every applicant qualifies. Borrowers need the implementing bank's final eligibility, security, repayment and pricing terms. The Budget identifies the Development Finance Department website and hotline 1819 as information channels for the schemes.

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