WB/IDA $ 100 m soft loan for private sector

Sri Lanka and the World Bank (WB) last week signed an agreement for a loan of US$100 million from the International Development Association (IDA) to support the Government 's economic reform program.

A recent World Bank study, the Systematic Country Diagnostic, highlighted the need for Sri Lanka to move from a largely inward looking and public sector driven economy to one that is capable of unleashing the potential of the private sector - leading to post-conflict economic growth and creating more and better jobs for Sri Lankans.

The Sri Lanka Competitiveness, Transparency and Fiscal Sustainability Development Policy Financing (DPF), which is only the second DPF to Sri Lanka in a decade, aims to support the government's reform agenda by reducing obstacles to private sector competitiveness, establishing transparent and well managed public institutions and improving fiscal sustainability.

"It is the aspiration of all Sri Lankans to move up the income ladder. To make this a reality the government is faced with the challenge of balancing the implementation of critical reforms aimed at sustaining growth while creating jobs," said World Bank Country Director for Sri Lanka and the Maldives, Idah Pswarayi-Riddihough. "Improving fiscal sustainability while creating the fiscal space for improved service delivery, social spending and capital investment are all priorities to make Sri Lanka more competitive. Ensuring success from reforms is not a one-time activity and the government will continue to use a number of instruments to make sure that outcomes achieved are sustained," she said.

Program Leader for Growth and Competitiveness of the World Bank, Emanuel Salinas Munoz said, "Improving a country's competitiveness and creating more and better jobs need a number of factors to be in place, from stable macroeconomic environment and good governance to predictable policies, adequate access to finance, and an efficient regulatory environment that minimizes the cost of doing business." "This program will support the Government's commitment to unleash the potential of Sri Lankan enterprises to grow, become more competitive and better integrate with the global economy," the Program Leader said. The Ministry of National Policies and Economic Affairs will be responsible for the overall implementation and coordination of the proposed operation.

Other agencies involved include the Ministry of Development Strategies and International Trade, the Ministry of Finance, the Ministry of Parliamentary Reforms and Mass Media, the Auditor General's Department, the Board of Investment and the Central Bank of Sri Lanka.

DPF operations provide untied financial support directly to the Treasury to distribute through their regular budgeting mechanisms upon completion of a package of policy and institutional reforms.

The World Bank Group provides technical assistance to the Government in support of its reform efforts under this program at no cost to the Government.