Tuesday, April 16, 2024

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ADB steps into assist Sri Lanka amidst forex crisis

The Asian Development Bank (ADB) is ready to assist Sri Lanka in “relevant policy areas” to enhance foreign currency earnings, in particular tourism and trade and investment, according to ADB President Masatsugu Asakawa.

He also said some of the macroeconomic issues the government is facing particularly fiscal and balance of payment deficits are challenging and need to be addressed in due course.

“ADB sees 2022 as a year where the government would be able to lay the foundations of more robust growth, backed by efforts towards greater diversification of Sri Lanka’s production structure and exports and an investment climate conducive for both SMEs as well as large enterprises with close linkages to the global economy,” he said.

ADB has supported SL Covid-19 response efforts in 2021 with US $460 million in new assistance to procure 12 million doses of COVID-19 vaccines, strengthen health care services in some underserved provinces, and improve rural road connectivity to boost access to jobs, incomes, and social services.

Complementing this sovereign assistance, ADB’s private sector window committed an equity investment of up to $80 million in John Keells Holdings PLC to boost the country’s food value chain and promote economic growth and job creation.

Sri Lanka is also very active in ADB’s Trade and Supply Chain Finance Program, which fills market gaps by providing guarantees and loans through partner banks in support of trade.

In 2021, along with financing 6 per cent of Sri Lanka’s import, this programme supported the import of $160 million worth of COVID-19 vaccines.

Our 2021 disbursements totaled $684 million. These funds supported ongoing projects in hydro, solar, and wind power generation; rural connectivity; building small and medium-sized enterprises (SMEs); education; irrigation; and primary health care, including for the COVID-19 response.

ADB’s priorities for this year include further support for rural connectivity, building vocational skills, and projects in water supply, renewable energy, and SMEs. Before the pandemic, ADB’s annual lending commitment was around $800 million.

More broadly, ADB will continue to support the country’s evolving development needs. It is now developing a new country partnership strategy for Sri Lanka, which will guide our programme from 2023 to 2027. We intend to focus on three priority areas.

First is sound macroeconomic management and private sector development as the basis of rapid and inclusive economic transformation.

Second is to promote balanced, green, and resilient rural–urban development. And third, is to enhance human capital. Across our work, ADB will continue to address broader issues such as climate change, gender equality, digitization, governance, capacity development, and regional cooperation and integration.

During the past two years just over $650 million was mobilised or repurposed from ongoing projects to support the government’s health, education, economic, and SME response.

ADB support started immediately after the onset of pandemic, with the provision of $4 million to procure medical supplies and materials to increase screening and testing capacity across the country.

He noted that ADB is very grateful for Sri Lanka’s offer to host the 55th Annual Meeting of the ADB Board of Governors this year.

In view of the ongoing challenges posed by COVID-19, the government and ADB have decided to hold this year’s annual meeting in two stages.

The first stage will comprise a virtual, reduced-scale meeting of the Board of Governors on May 5 to conduct several matters of official business required by the institution.

The second stage in September will include a series of seminars and knowledge sharing events under the theme “Positioning Climate Resilient Green Recovery for the Post-COVID-19 World.” These sessions will focus on ways to safely reopen and stimulate economies after COVID-19, while ensuring that future growth is both green and sustainable.

The programme will discuss tourism, digital transformation, blue economy and finance, gender equality and greening of the economy, including the region’s response to climate change, among others.

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