DFIs Urged to Shift from Lending to Mobilising Private Capital for Growth 📈

• ADFIAP 49th Annual Meetings: Over 300 regional leaders from 45 countries gathered in Colombo (hosted by DFCC Bank) to discuss shifting development finance from direct balance-sheet lending to de-risking and unlocking private investment. • Macroeconomic & Sector Context: Sri Lanka's economy recorded GDP growth of 5.1% in Q1 and 4.2% in Q2 2026, though agriculture shrank 2.3% in Q2. Agriculture accounts for 8.4% of GDP but employs 23.7% of the workforce (~1.9M people), reflecting low productivity where workers earn under the poverty line (~Rs. 17,679/month). National Credit Guarantee Institution issued 2,000 guarantees totaling over Rs. 14 Bn in SME loans (avg Rs. 7 Mn/loan), aiming to double to 4,000 by end-2026. • Key Expert Proposals & Reforms: Central Bank (CBSL): Advocates using guarantees, blended finance, and risk-sharing to bridge funding gaps, aligned with the National Climate Finance Strategy 2025–2030. Banking & Fiscal Policy: Standard Chartered Sri Lanka noted banking tax levies absorb up to 60% of profits, deterring capital; urged expanding priority lending beyond the 10% agriculture quota. Trade & Structural Reforms: Advocata called for land and labor reforms, joining RCEP and CPTPP, and deeper India trade ties. John Keells Holdings highlighted the need for regional digital infrastructure (e.g., digital identity, digital currency) to access larger export markets.