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Sept 26, 2008 (LBO) – The United States has guaranteed 540 million rupees of conflict area credit in Sri Lanka by a domestic leasing firm to bring finance into the island’s eastern province which had seen intense fighting until recently. The USAID guarantee will be effective for three years from October 1, 2008, to September 30, 2011.

USAID said its guarantee would expand lending in the underserved eastern region, and also enable businesses to access loans or leases at a competitive interest rate.

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USAID said it was guaranteeing lending of Lanka Orix Leasing Company.

“USAID believes that this agreement will help LOLC to expand its agriculture and microfinance lending while benefiting eastern businesses, which would be able to access micro loans or leasing at a reasonable interest,” USAID mission director Rebecca Cohn was quoted as saying in a statement.

LOLC plans to use at least four million dollars to on-lend to entrepreneurs in conflict-affected areas in the Eastern Province.

“The guarantee would mitigate the risks for LOLC and increase the access to finance for borrowers in Eastern and