ADB Reaffirms Long-Term Partnership with Sri Lanka | Asian Development Bank

ADB Reaffirms Long-Term Partnership with Sri Lanka

News Release | 30 August 2006

COLOMBO, SRI LANKA - ADB is firmly committed to helping Sri Lanka achieve its long-term development goals and working closely with the government to improve implementation of ongoing projects in the country, a senior ADB official said during a two-day official visit.

Kunio Senga, Director General of ADB's South Asia Department, after a meeting with high-ranking Sri Lankan officials, including Dr. P.B. Jayasundara, Secretary to the Treasury, said ADB and the government took a close look at ADB's active portfolio of loans and grants totaling $1.6 billion.

Total cumulative ADB lending to Sri Lanka stands at about $3.7 billion.

ADB and the government identified valuable savings that can be made in existing projects and are now looking to reallocate resources to key infrastructure sectors like roads, ports, water supply and sanitation. For example, funds will be allocated to the high priority water supply expansion projects in Polonnaruwa, Batticaloa and Muttur.

"We had discussions on measures to reduce bottlenecks in policy implementation and ways to focus on key sectors as identified by the government," Mr. Senga said. "We will respond to changing priorities set by the government for its people. ADB will provide additional resources to sectors which are recognized as key areas by the government."

The government and ADB also discussed the agreement for expansion of Colombo South Port. ADB has already committed to finance $200 million of the total cost of $500 million for the project, which is seen as critical to boosting the domestic economy.

ADB and the Sri Lankan government agreed on measures that will help put slow moving projects back on track and to forego the second tranche loan under the Power Sector Reform Program. ADB views increased power generation, institutional reforms, and restructuring of finances of Ceylon Electricity Board (CEB) as key to strengthening domestic power sector and stands ready to help the government meet these objectives.

ADB officials also discussed importance of microfinance programs in helping the poor but underscored the need for an interest rate structure that allows intermediaries to support themselves.

Mr. Senga said ADB was concerned over the recent intensification of conflict in the north and eastern parts of the country. ADB has a number of ongoing projects in the region, including reconstruction projects in tsunami-hit areas.

"In the absence of peace and a conducive environment, it is challenging to implement projects. We sincerely hope that the situation stabilizes and we will continue to monitor the situation and work together with the Government and other development partners," he said.

Mr. Senga reiterated that ADB was a long-term development partner in Sri Lanka and would continue to lend full support to the government to meet its development goals.