Independent Evaluation

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Country Assistance Program Evaluation for Sri Lanka: Inclusive Development and Conflict Resolution: Major Challenges in the Future
Completed: 2007

This study is the first country assistance program evaluation for Sri Lanka. The evaluation period covered two decades (1986-2006), with emphasis on the more recent decade. The main objectives of the evaluation were to assess the performance of ADB's operations in Sri Lanka and to identify forward-looking lessons for the preparation of the next country strategy.

Summary of Findings

• ADB has been Sri Lanka's development partner for four decades. Cumulative loan approvals since 1968 amount to $3.7 billion for 130 loans. Most of this was in the last two decades (90 loans worth $3.3 billion). Over the same period, lending was supported by 195 technical assistance grants totaling $87.6 million. Private sector operations have been relatively limited.



• Development operations in Sri Lanka have taken place in a challenging environment, marked by a civil conflict that has lingered with varying intensity over more than two decades. Despite these difficulties, the economy of Sri Lanka has remained resilient.



• The country strategies in the last decade were generally relevant and responsive to development challenges at the time they were formulated. However, the changing political economy context since April 2004, conflict resurgence, and shifting government policies have diminished the relevance of the current country strategy (2004-2008). A strategic repositioning is called for in formulating the new country strategy.



• Overall, the performance of ADB's country assistance program in Sri Lanka is rated "partly successful". This rating is derived from a combined rating of (i) top-down assessment, which includes country strategy positioning, contribution to development impacts/results, and ADB performance; and (ii) bottom-up assessment of the sector assistance programs.



• Across sectors, performance has been mixed. Sectors in which the assistance program has been successful in the last two decades include (i) transport (mainly roads), (ii) education, and (iii) water supply and sanitation.



• Performance has been rated less than successful in (i) finance (policy-based); (ii) power; (iii) law and economic management; (iv) agriculture; and (v) multisector projects.



• ADB's policy-based lending operations in Sri Lanka have been "partly successful", which draws attention to (i) caution in the future in using this modality, (ii) strengthening the design and implementation of policy-based programs, and (iii) more concerted efforts to explore alternative options for achieving the same objectives. A careful assessment of reform options and readiness is crucial for policy-based programs.

Conclusions and Recommendations

The overall conclusion is that amid a challenging environment, ADB should

• review its development assistance to conflict-affected areas in the North and East from the perspectives of conflict sensitivity;
• review focus of its development assistance, particularly within sectors that have fallen short of achieving significant results but are extremely important for poverty reduction and economic growth;
• be prepared to remain engaged in policy dialogue during difficult times;
• provide assistance to Sri Lanka for results-based monitoring and development evaluation to promote development effectiveness;
• assess the Sri Lanka Resident Mission's roles and functions in order to strengthen its capacity.