The Asian Development Bank (ADB) has unveiled a new chapter in its collaboration with Sri Lanka. The ADB Sri Lanka Country Partnership Strategy (CPS) 2024-2028, launched in Colombo, outlines a five-year roadmap for fostering sustainable recovery, building resilience, and reigniting economic growth in the island nation.
This strategic partnership moves beyond traditional project financing. Takafumi Kadono, ADB Country Director for Sri Lanka, emphasizes a shift towards budget support, contingent on ongoing and planned policy reforms. These reforms encompass crucial sectors like power, finance, water, tourism, agriculture, public financial management, and capital markets. Budgetary support will be aligned with the International Monetary Fund (IMF) program, with an annual commitment of USD 300-400 million, subject to reform progress.
While budget support forms a key pillar, the ADB acknowledges the need for selective infrastructure and social sector investments requiring external financing. Recognizing the critical role of private investment, Kadono highlights the importance of creating a more attractive environment to lure both foreign and domestic investors. Sri Lanka’s current foreign direct investment (FDI) stands at a low 1% of GDP, a figure that necessitates improvement.
The overarching goal of the CPS is multifaceted. It aims to not only revive growth but also ensure its sustainability through climate action, disaster resilience, and environmental consciousness. These goals are further bolstered by a commitment to gender equality, social inclusion, and robust governance with strong capacity development and digitalization initiatives.
The strategic objectives outlined in the CPS translate these goals into action. Strengthening public financial management (PFM) and governance forms the first pillar. The second objective focuses on fostering private sector development (PSD) that promotes green growth. Finally, the CPS emphasizes improving access to climate-smart public services while deepening social inclusion.
This comprehensive strategy reflects a well-coordinated effort. The CPS aligns with Sri Lanka’s national priorities, global commitments like the Paris Agreement and Sustainable Development Goals (SDGs), and the ADB’s own Strategy 2030. It also integrates with the ADB’s new operating model, which prioritizes climate action and private sector engagement.
With a clear vision and a multi-pronged approach, the ADB Sri Lanka Country Partnership Strategy presents a promising path for Sri Lanka’s future. The success of this strategy hinges on sustained reform efforts, a conducive investment climate, and continued collaboration between the ADB and Sri Lankan stakeholders.