'ADB's dedication commendable'

The dedication of the Asian Development Bank (ADB) to reduce the level of poverty by improving the living standard of 1.7 billion poor people in the region, unable to access basic needs is commendable, said Senior Minister of International Monetary Cooperation and ADB, Temporary Alternative Governor Dr. Sarath Amunugama, at the 47th Annual meeting of the Board of Governors of the ADB.

He said, “I am confident that the ADB can overcome the challenge of limitation in the level of lending, with its good rating and technical expertise to raise resources in domestic and international markets through appropriate instruments.”

“I perceive that ADB should further expand its infrastructure financing and investment in member countries through channelising global savings,” Amunugama said.

Sri Lanka greatly appreciates ADB’s assistance to members through its main devices such as loans, grants, policy dialogue, technical assistance and equity investments. The ADB has ensured sustainable and inclusive growth across the Asia and Pacific region.

ADB's annual lending volume is typically about $6 billion, with technical assistance usually totalling about $180 million a year. The ADB is one of the major multilateral development partners of Sri Lanka with over 46 years of productive partnership. Since its setting up in 1966, the bank has approved a total of 166 loans, with cumulative lending of US $ 5.8 billion to Sri Lanka. In addition, ADB has provided US $ 481 million grant to Sri Lanka.

The active ADB portfolio to Sri Lanka spread across six sectors with 20 loans and seven grants and currently stands at US $ 1,784 million. The total disbursement in 2013 under these loans was US $ 289 million.

In 2013, ADB declared effectiveness of loans amounting to US $ 552 million to implement five projects in Sri Lanka. In addition, the Government has successfully conducted negotiations with ADB in 2013 to mobilise US $ 163 million for the implementation of two projects. Initiatives have now been taken to use the ADB assistance to support the on-going sectoral development program of the Government differing from the previously adapted project-based financing.

This new modality of financing is proposed for the long-term investment program in relation to development of roads, power, education and water supply sectors.

The future ADB financing to Sri Lanka are being strategised along with new development initiatives to develop 1,000 rural townships ensuring connectivity through national, provincial and rural feeder roads and to develop medium scale irrigation cascade systems and tapping river water to improve access to irrigation and drinking water in several marginalised districts.

“Throughout the past decade the Government of Sri Lanka attached a great importance to the economic development of the country even though Sri Lanka had been experiencing severe setback due to 26 years of terrorism. Peace and stability in the country has opened more opportunities for the economy and greatly improved people's lives,” Dr Amunugama said.

“In fact the Government’s emphasis on the economical sustainability has grown stronger. The Government’s commitment to unleash the great potential of the economy has lifted the aspirations and collective energies of the Sri Lankans,” he said.

Effective economic policies have resulted in sustained growth in Sri Lanka at an unprecedented pace. The economy of Sri Lanka continues to progress steadily recording an average growth rate of 7.5% during the four years 2010, 2011, 2012 and 2013 amidst global instabilities.

The growth of the economy of Sri Lanka rebounded to 7.3% last year from 6.4% in 2012 reflecting domestic demand strengthening and a pick up in exports and tourism. Sri Lanka has been maintaining single digit inflation for nearly five years and the country’s per capita income has risen sharply from US $ 1,241 in 2005 to US $ 3,282 in 2013 and is projected to increase well beyond US $ 4000 by 2016.

With the end of the internal conflict and also the transformation of the economy to a middle income status, the Government of Sri Lanka has initiated a number of massive investments on the infrastructure development in the country with local resources and foreign funding arrangements. Accordingly, mobilisation of foreign funding from development partners has been increased considerably.

The continuous progress has been underpinned by a stable and prudent macroeconomic policies followed by the Sri Lankan Government.

Within the medium term fiscal framework, the Government’s debt management strategy is designed to reduce the government debt gradually to a lower level in line with lower fiscal deficit and higher economic growth in the range of 7-8 percent.

The debt to GDP ratio is targeted to reduce below 65 percent by 2016 and to 60 percent by 2020 of which foreign debt will be around 30 percent of GDP.

The government has been pursuing large-scale reconstruction and development projects to spur growth in lagging areas, develop small and medium enterprises and increase agricultural productivity. The government's fiscal consolidation efforts and strong GDP growth in recent years have helped bring down the government's fiscal deficit.

The Government has also taken measures to unleash the dynamism of the private sector to facilitate the country’s transition to higher income status.

He said that in 2013, the Government and ADB developed the medium-term Country Partnership Strategy 2014-2016 for ADB partnership in Sri Lanka. It is closely aligned with the Government's strategy, Mahinda Chintana 2010-2016, and ADB's long-term strategic framework, Strategy 2020. It reflects the country’s transformation and addresses the priority agendas of middle–income countries, such as skills development, transport services optimisation, and sustainable energy.

Accordingly US $ 926 million has been earmarked for the period 2014-2016.