IFC Strategy
IFC’s portfolio in Sri Lanka (as of end February 2007) was $89.56m in 6 projects spanning the financial services, telecoms and infrastructure sectors.
IFC’s strategy has been to support the ‘growth’ theme of the 2003 CAS through investments that foster private sector participation in the economy. IFC has sought investments which:
- Develop financial markets and add value to the on-going consolidation of financial services;
- Expand the private provision of infrastructure services, especially power, ports and telecommunications;
- Support the growth of export-oriented manufacturing and service companies;
- Encourage the expansion of Sri Lankan companies’ operations into the South Asian region;
- Support the growth of SMEs in conjunction with multilateral and bilateral partners.
In recent years, investment opportunities have been limited. A number of constraints can be identified as having hindered IFC’s ability to implement the strategy more fully, thereby limiting the investment opportunities for IFC in the country. These include:
- Few opportunities for investments large enough for direct IFC financing.
- A change in the government's stance towards privatization and lesser encouragement of private investment following left-wing groups gaining ascendancy in the elections of April 2004. This resulted in a marked divergence in the attitudes of the two major political parties towards the private sector and increased political uncertainty in the minds of investors.
- Indecision in policy making resulting from the above (e.g. power sector investment strategy).
- An increase in liquidity of domestic financial institutions, particularly post the Tsunami of December 2004, limiting opportunities for IFC as the domestic financial sector has provided sufficient, cheap money for the corporate sector.
For more information, see the World Bank Group
Country Assistance Strategy and the latest Country Assistance Strategy
Progress Report.
