Financial Sector Safety Net Strengthening Project

The objective of the Financial Sector Safety Net Strengthening Project is to strengthen the financial and institutional capacity of Sri Lanka's financial sector safety net, with the focus on the deposit insurance scheme. There are three components to the project, the first component being capitalization of Sri Lanka deposit insurance scheme. The first component will finance the reserves of SLDIS. The disbursement under this component will be based on results and eligible expenditures, linked to the progress in SLDIS’s institutional reform. As in other WB projects of this nature, the use of WB credit proceeds towards the deposit insurance scheme reserves will constitute the eligible expenditure, irrespective of whether or not these reserves later on will need to be deployed for insured deposit payout or contributing to bank resolution. The second component is the institutional capacity building for CBSL. This component will finance technical assistance activities to address the large capacity building requirements identified in the recent IADI CP assessment. Finally, the third component is the project implementation and monitoring. This component aims to provide support to the CBSL for effective project implementation, in line with the WB’s applicable standards of financial management (FM), procurement, social and environmental risk management, monitoring and evaluation (M&E), and reporting. It will finance the operations of the small project implementation unit (PIU) under CBSL auspices, including staff responsible for project coordination, financial management, procurement, and monitoring and evaluation. PIU will be responsible for general project coordination, ensuring compliance with WB’s fiduciary and Environmental & Social (E&S) requirements, and monitoring and reporting the project results.