A new 5-year country partnership strategy (CPS) for 2024 to 2028 maps out ADB’s support for Sri Lanka’s efforts to restore macroeconomic stability by addressing the causes of the economic crisis, and laying the foundation for sustainable recovery, resilience, and growth. The new CPS will help strengthen public financial management and governance, foster private sector development promoting green growth, and improve access to climate-smart public services and deepen inclusion. It also emphasizes the need to mainstream climate change, gender equality and social inclusion, governance, and digitalization in all ADB operations.

Transcript

Following the end of the civil conflict in 2009, Sri Lanka focused on rebuilding and rehabilitation.  Poverty rates fell dramatically and Human Development indicators remained high.

However, weaknesses in macroeconomic management and governance led to an economic crisis in 2022.

The country defaulted on its debt repayments, inflation peaked at 70%, and foreign currency reserves fell sharply. 

Shortages in essentials such as fuel and medicine disrupted economic activity and caused severe hardship for the people. 

To stabilize the economy and support recovery, Sri Lanka entered into its 17th IMF program in 2023.

Significant progress has been made. However, much work remains to ensure economic recovery and growth.

The Asian Development Bank will support Sri Lanka in the recovery effort with a new Country Partnership Strategy to:

•    Strengthen Public Financial Management and Governance
•    Foster Private Sector Development Promoting Green Growth
•    Improve Access to Climate-smart Public Services and Deepen Inclusion

ADB will assist the government to accelerate domestic resource mobilization, improve public finances, and strengthen public financial management and debt management systems.

ADB will assist ongoing efforts to reform state-owned enterprises to reduce financial losses and thereby the debt burden of the government.

To revive economic activity and channel savings into productive uses, ADB will contribute toward stabilizing the financial sector, improving access to finance, and building sustainable capital markets.

Creating a conducive environment for public-private partnerships, support to SMEs and economic zones, and trade facilitation will drive exports and investments and generate new sources of foreign exchange earnings. ADB will also promote the development of renewable energy and ecotourism to enable the shift toward green growth. 

ADB will provide support to protect the poor and vulnerable, who have been hit the hardest by the economic crisis. It will prioritize agriculture modernization and boosting food security. ADB will promote youth employability by enhancing their skills and also assist the health sector to improve efficiency and the responsiveness of systems.

The Country Partnership Strategy identifies three cross cutting themes, which will be built into ADB’s projects and programs. 

•    Climate action, disaster resilience, and environmental sustainability.
•    Gender equality and social inclusion.
•    Governance, capacity building, and digitalization.

Under the new Country Partnership Strategy 2024-2028, ADB will help address the country’s most pressing needs. At the same time, ADB will remain flexible to respond to changing circumstances as the country navigates the crisis. ADB will continue to work with the government and, in coordination with other development partners, support Sri Lanka foster a sustainable recovery, build resilience, and revive growth.

SHARE THIS PAGE