Courtesy Adaderana

The Asian Development Bank (ADB) has launched a new country partnership strategy (CPS) for Sri Lanka covering the period 2024–2028. The strategy will focus on restoring the country’s macroeconomic stability, reviving growth, and establishing the foundation for sustainable recovery and resilience.

This new partnership strategy will build on ADB’s ongoing assistance to support the country’s efforts to restore macroeconomic stability, and to achieve green and long-term sustainable growth,” said ADB Country Director for Sri Lanka Takafumi Kadono. The CPS responds to Sri Lanka’s economic situation by tailoring ADB assistance to address the country’s long-standing macroeconomic imbalances and structural impediments through knowledge solutions, policy advisory support, and priority investments.”

Sri Lanka is showing signs of stability and recovery from a deep economic crisis. Inflation significantly declined from 69.8% to 4.0% between September 2022 and December 2023. Foreign exchange reserves have increased to $4.4 billion in 2023 from $1.9 billion in 2022. Sri Lanka’s economic growth returned to positive territory in the second half of 2023 and that momentum is likely to continue.

ADB’s assistance under the new CPS will focus on three strategic objectives: strengthening public financial management and governance; fostering private sector development promoting green growth; and improving access to climate-smart public services and deepening inclusion. Three thematic priorities—climate action, disaster resilience, and environmental sustainability; gender equality and social inclusion; and governance, capacity development, and digitalization—will be integrated into the CPS objectives.

The new CPS will support the country’s efforts to tackle the key underlying causes of the crisis. ADB will focus on reforming public financial management system, strengthening governance, accelerating domestic resource mobilization, and improving fiscal and debt sustainability, as well as measures to improve the performance of state-owned enterprises.

The strategy recognizes the critical role of the private sector in the country’s recovery and long-term economic growth. Structural reforms to promote greater private sector participation in the economy and diversify the economy with emphasis on green and sustainable growth will be supported under the new strategy. ADB will continue to support financial inclusion and small and medium-sized enterprises development, especially those managed by women, and provide advisory and capacity building support to promote trade and investment. The strategy aims to improve access to climate-smart public services and deepen inclusion through strengthening social protection and human capital development and fostering agriculture modernization.

As of the end of December 2023, ADB had committed more than $3.7 billion in 45 public sector loans and grants in Sri Lanka, as well as $25.6 million in private sector investments. 

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.

-ADB-