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ADB Planning its Largest-Ever Program of Assistance for Sri Lanka

MANILA, PHILIPPINES (9 September 2003) - The Asian Development Bank (ADB) plans to raise its lending assistance to Sri Lanka to US$700 million over the next three years, according to the Country Strategy and Program (CSP) for 2004-2008 endorsed today by ADB's Board of Directors.

CSPs define ADB's medium-term development strategy as agreed with the country. A CSP update is prepared every year taking into account the continued relevance of the CSP, its implementation, and ADB's operational program for the next three years.

This CSP is closely linked to the Tokyo Conference for Sri Lanka, held in early June this year, at which ADB played a major role. As one of Sri Lanka's most important development partners, ADB pledged support at the conference for the country's reconstruction and development of up to $1 billion over the four-year period from 2003 to 2006. The 2003 program is now well-advanced, and is likely to be fully committed before the end of the year. The new CSP program provides both lending and grant assistance for the remaining three years of the period.

ADB's top priorities in Sri Lanka are supporting broad-based economic growth, advancing social development and supporting improved governance. Emphasis will be placed on poorer regions and those encountering particular hardship.

Out of the total, $400 million will come from ADB's Asian Development Fund (ADF), which supports the sustainable social and economic development of poor countries in the Asian and Pacific region, and $300 million will be from ordinary capital resources (OCR).

The proposed lending level represents a $100 million increase over the amount allocated for the last planning cycle (2003-2005), to answer the country's reconstruction and development needs as it recovers from the effects of the two-decade long civil conflict. The timing and magnitude of the assistance program will be responsive to the developing peace process and the country performance.

"With greatly improved prospects for a lasting peace and a radical economic reform strategy - Regaining Sri Lanka - in place, the country now has a completely different prospect for development," says Richard Vokes, the Director of ADB's Operations Coordination Division for South Asia.

"The principle development challenge is now to support the Government's efforts for reconstruction and development, targeting support at pro-poor economic growth."

Reconstruction, a pressing need for the north and east of the country where the civil conflict has devastated infrastructure and peoples' lives in equal measure, has begun to be possible following the ceasefire agreement of February 2002. The CSP reflects this development and provides resources to support the region's recovery.

The need, however, is far greater than ADB alone can support. The immediate and medium term needs of these war ravaged areas amount to more than $1.5 billion. It will require assistance from all of Sri Lanka's development partners and must also be provided without neglecting the equally important needs of the rest of the country.

Reflecting ADB's country-wide focus, ADB's support over the three-year duration of the new program cycle will help the country provide quality education, increase access of the poor to social services, develop basic economic infrastructure, rebuild conflict-torn areas and reintegrate them into the national economy, enhance rural livelihoods, remove the barriers to attracting investment, and improve governance.

The lending program will be supported by technical assistance operations of about $13 million. The TA program will support project preparation, institutional development, and economic, thematic and sector work.

More at adb.org/media

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