ADB President Commends Strong Growth Prospects during 3-Day Visit to Sri Lanka

News Release | 18 June 2014

COLOMBO, SRI LANKA – Asian Development Bank (ADB) President Takehiko Nakao today met with Sri Lanka’s President Mahinda Rajapaksa, as well as several ministers and senior officials, to discuss global, regional and bilateral issues, including challenges and opportunities for the Sri Lankan economy over the short to medium term. Yesterday, President Nakao spoke at the Academy of Financial Studies. Tomorrow, he will visit several ADB-supported projects across the country.

At the meeting with President Rajapaksa, Mr Nakao commended the country’s strong economic growth, as well as its ongoing efforts to lift the country into upper middle income status.

“This is my first visit to Sri Lanka—a country with a rich cultural heritage and abundant natural resources, a country in the middle of an exciting, historic transformation,” Mr. Nakao said in his speech yesterday at the Academy of Financial Studies. “In my view, Sri Lanka is on the path to becoming another Asian economic success story.”

ADB forecasts that the Sri Lankan economy will expand 7.5% both this year and next, one of the fastest growth rates in the region. That would follow a 7.3% expansion registered in 2013. Mr. Nakao mentioned “what is especially striking is that economic activity in the post-conflict Northern and Eastern provinces expanded almost twice as fast as in the rest of the country. This is a remarkable sign of reconstruction, rehabilitation and reconciliation.”

Going forward in order to sustain growth, President Nakao stressed the importance of maintaining 1) sound macroeconomic policy including the reform of state-owned enterprises; 2) strong investment in physical infrastructure by promoting public-private partnerships to mobilize private sector resources as well as implementing investment by the government itself backed by its own resources and supported by international partners including ADB; 3) investing in skills development through technical and vocational training; 4) improving investment climate and facilitating private sector development; 5) pursuing inclusive growth by prioritizing regions and sectors currently lagging behind; and 6) having clear strategy for development and sharing it with the people.

President Nakao indicated that ADB will place greater emphasis on human resource development such as education and skills training, while maintaining a focus on infrastructure and private sector development.

Sri Lanka joined ADB as a founding member in 1966. As at the end of 2013, ADB had approved 176 in government and nongovernment loans totaling $6.17 billion for Sri Lanka. In addition, ADB has provided $358 million in grant assistance (including ADB-administered, cofinanced grants) for projects, and $122.8 million in 259 technical assistance grants.

ADB assistance to Sri Lanka has focused on energy, roads and ports, water supply and sanitation, education and skills development, and post-conflict reconstruction in the north and east. ADB will also be involved with water resource management.

Mr. Nakao visited Colombo Port, which last year completed the first stage of expansion part-financed with a $300 million loan from ADB. Following the public-private project, the country’s largest port is now able to accommodate the latest generation of container ships that can carry 18,000 20-foot equivalent units. The port has facilities to send goods faster and more cost efficiently to other ports in the region, strengthening the country’s strategic position on the key Asia-Europe shipping route.

President Nakao will also visit the Giragama Tea Factory, which is owned by Pussellawa Plantations Ltd., one of the largest tea producing companies in Sri Lanka. ADB provided assistance to modernize its processing facilities.

Mr. Nakao will then visit the Habarana Maha Vidyalaya, a school that received ADB funds under the Education for Knowledge Society Project. These funds were used to upgrade its three-storied building to house the Administrative Unit, Computer Lab, Audio-Visual Room, Library, and IT based Learning Facility. President Nakao will wrap up his trip by travelling along the Dambulla-Galkulama road section, the main link to the northern part of the country, a project supported under ADB-funded Northern Road Connectivity.