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ADB new Partnership Strategy for Sri Lanka to foster sustainable recovery

By: Staff Writer

March 21, Colombo (LNW): The Asian Development Bank (ADB) announced yesterday the launch of a new country partnership strategy (CPS) for Sri Lanka spanning 2024–2028.

The strategy aims to restore the country’s macroeconomic stability, revive growth, and lay the groundwork for sustainable recovery and resilience.

ADB Country Director for Sri Lanka Takafumi Kadono stated, “This new partnership strategy will build on ADB’s ongoing assistance to support the country’s efforts in restoring macroeconomic stability and achieving green and long-term sustainable growth.”

 He added, “The CPS responds to Sri Lanka’s economic situation by tailoring ADB assistance to address the country’s long-standing macroeconomic imbalances and structural impediments through knowledge solutions, policy advisory support, and priority investments.”

Sri Lanka is displaying signs of stability and recovery from a severe economic crisis. Data indicates a significant decline in Sri Lanka’s inflation from 69.8% to 4.0% between September 2022 and December 2023.

Foreign exchange reserves have surged to $4.4 billion in 2023 from $1.9 billion in 2022. Economic growth in Sri Lanka returned to positive territory in the second half of 2023, with this momentum expected to persist.

ADB’s assistance under the new CPS for Sri Lanka will focus on three strategic objectives: strengthening public financial management and governance, fostering private sector development, promoting green growth, and improving access to climate-smart public services and deepening inclusion.

These objectives will incorporate three thematic priorities: climate action, disaster resilience, and environmental sustainability; gender equality and social inclusion; and governance, capacity development, and digitalization.

The new CPS will aid in addressing the key underlying causes of the crisis in Sri Lanka. ADB will concentrate on reforming the public financial management system, strengthening governance, accelerating domestic resource mobilization, enhancing fiscal and debt sustainability, and implementing measures to enhance the performance of state-owned enterprises.

Recognizing the crucial role of the private sector in the country’s recovery and long-term economic growth, the strategy aims to implement structural reforms to promote greater private sector participation in the economy and diversify the economy with an emphasis on green and sustainable growth.

ADB will continue to support financial inclusion and the development of small and medium-sized enterprises, particularly those led by women, and provide advisory and capacity-building support to encourage trade and investment.

The strategy also aims to enhance access to climate-smart public services and deepen inclusion by strengthening social protection and human capital development and fostering agricultural modernization.

 As of the end of December 2023, ADB had committed over $3.7 billion in 45 public sector loans and grants in Sri Lanka, along with $25.6 million in private sector investments.

ADB remains committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific region, while continuing efforts to eradicate extreme poverty. Established in 1966, ADB is owned by 68 members, with 49 from the region.

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