Sri Lanka Loan Scheme Helps Farmers and Fishermen in Former Northern War Zone

10th November 2009, www.lankabusinessonline.com

Farmers and fishermen have been among the main borrowers under a Sri Lankan government loan scheme to revive economic activity in the former northern war zone, the Central Bank said.

It said in a statement that a total of 1,875 loans valued at 264 million rupees has been disbursed under the 'Vadakkin Wasantham' (Awakening North) loan scheme by the state-owned People’s Bank and Bank of Ceylon.

Out of the total granted, 47 percent of loans (890) have been disbursed for agricultural purposes while 28 percent (524) were for trade and service sector activities.

"In agriculture, farmers have shown a keen interest to obtain loans for fruit cultivation, i.e. grapes and banana and livestock development activities."

The balance 25 percent (461 loans) has been obtained by borrowers in the fisheries, small and micro-industries sectors in the northern Jaffna peninsula.

The special loan package launched in July, 2009 is being implemented with loans up to 200,000 rupees being granted at an interest rate of 12 percent a year, with repayment over a period of five years.

The peninsula was cut off from the mainland for years as Tamil Tiger separatists controlled the land route.

Restrictions on fishing and farming were also imposed because of the war, affecting the livelihood of a large number of residents of Jaffna.

But the 30-year conflict ended in May when government forces defeated the Tigers, resulting in an economic revival in the north.

The Central Bank also said in addition to the loans already given under the scheme, another 5,927 people have also been registered under the two state banks and Hatton National Bank and Sanasa Development Bank for credit facilities.

It said three other credit programmes - a rural credit scheme, an agro-livestock loan scheme and a poverty alleviation microfinance project - were being implemented through participating financial institutions by the Central Bank in the Northern Province:

"With the commencement of agricultural activities for the (next) cultivation season this month, it is expected that a large volume of agricultural credit will be disbursed by PFIs in the Northern Province."