Colombo—The Sri Lankan Cabinet has given the green light to a proposal for creating a financial stability fund, initially funded with one billion Sri Lankan rupees (approximately 3.3 million U.S. dollars), aimed at enhancing the resilience of the nation's financial sector.

According to Namibia Press Agency, the announcement was made by the government's information department this Tuesday. President Ranil Wickremesinghe proposed the initiative to the cabinet as a measure to solidify the banking resolution framework under the ongoing financial crisis management efforts. "The Central Bank of Sri Lanka has identified the urgent need to strengthen the bank resolution framework as part of the financial institutes' crisis management framework," stated the department.

The proposed financial stability fund is designed to support the resolution objectives outlined in the Banking (Special Provisions) Act and to effectively implement the resolution procedures it mandates. Additionally, Sri Lanka is slated to secure a 200 million U.S. dollar loan this year as part of the stability and reform program in the financial sector, which is supported by the Asian Development Bank.