Proposal for a New Public Development Bank to Anchor Economic Recovery 📈

• The Current Crisis Sri Lanka faces a compounding economic crisis following Cyclone Ditwah, which caused US$ 4.1 Bn in asset damages. This adds to structural vulnerabilities from the 2022 debt crisis and ongoing IMF austerity measures. • The Development Finance Gap The absence of a dedicated public development bank has left SMEs and rural producers vulnerable. Current commercial lending focuses on short-term, high-interest loans, neglecting long-term projects in: Agribusiness and Manufacturing Infrastructure and ICT Industrial development in peripheral districts • Historical Context & Privatization Previously, the DFCC (est. 1955) and NDB (est. 1979) supported early industrialization in sectors like cement and tyres. However, both were commercialized or privatized by 2005 under neoliberal reforms, removing the state's mandate for concessional development finance. • Strategic Recommendations • Institutional Necessity: Establish a new public development bank to provide project-based financing rather than collateral-based loans. • Resilience: Use the bank as a counter-cyclical buffer against global trade tensions and climate shocks. • Diversification: Move away from "footloose" export dependency (e.g., apparel) toward strengthening domestic production and employment. • Global Context With over 500 development banks globally, countries like Ghana, Nigeria, and Vietnam are successfully using these institutions to bridge financing gaps and stabilize economies during shocks.