ADB Loan to Help Sri Lanka End Water Scarcity in Dry Zone | Asian Development Bank

ADB Loan to Help Sri Lanka End Water Scarcity in Dry Zone

News Release | 24 June 2015

MANILA, PHILIPPINES – The Asian Development Bank (ADB) has approved a loan of $453 million to help Sri Lanka complete its ongoing drive to deliver surplus water from the Mahaweli river basin to its dry zone, where scarce supplies undermine agricultural output and household incomes.

“Sri Lanka has abundant water resources but they are not distributed evenly across the country,” said Lance Gore, ADB Water Resources Specialist. “This assistance will allow the government to complete a decades-old program to transfer water from the country’s largest river to the dry zone, giving a real boost to growth, food security, and poverty reduction.”

The dry zone region (including North Central Province, Central Province, North Western Province and Eastern Province) is home to nearly a third of the country’s population, with 70% of rural dwellers dependent on agriculture for their livelihood. However, the zone receives less than 1,500 millimeters of rain per year, and droughts are common, which severely constrains agricultural output. As a result, average household incomes are around 10% lower than in other parts of the country, and this situation is expected to worsen as the population grows and rainfall in the region diminishes further due to climate change.

The assistance will help the government to finish the rollout of water delivery and storage infrastructure, which was initiated in the 1970s but not completed as a result of resource constraints and conflict. The loan will finance more than 260 kilometers of new and upgraded canals, reservoirs, and other irrigation infrastructure by 2024. Funds will also be used for studies on improving water management and delivery systems.  

As well as providing more irrigation water, the investments will deliver clean drinking water to over 350,000 people, resulting in improved community health in areas where chronic kidney diseases are prevalent.

ADB’s loan assistance includes $262 million from its ordinary capital resources and $191 million from its concessional Asian Development Fund. Development partners will cofinance $114 million, with counterpart support of $108 million from the Government of Sri Lanka. The investment program will be carried out in three tranches, with the first due to start in July 2015, and the full program earmarked for completion by December 2024.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2014, ADB assistance totaled $22.9 billion, including cofinancing of $9.2 billion.